Friday, August 31, 2012

SB 863 letter

Please see my response to Chronicle Editorial this morning opposing passage of workers compensation reform bill.

The attachment is the support Small Business California has gathered from small business associations and small businesses around the state. We were able to get 24 associations and 124 small businesses sign on to the letter. (letter is below)

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116



From: Scott Hauge

Sent: Friday, August 31, 2012 6:24 AM

To: 'Diaz, John'

Subject: FW: SB 863 letter

John, Please see attached small business associations and small business owners who are supporting SB843. We respectfully disagree with the Chronicle Editorial saying that we should wait to pass a workers compensation reform bill.

Small businesses can’t wait. We are hearing rates are going up over 12% if this does not pass. Small businesses are struggling right now given the state of the economy and these additional cost could potentially put small businesses out of business or force them to cut employees.

The other part of the equation is that our employees can’t wait for an increase in their benefits. In 2004 they saw their benefits cut drastically and SB863 will help solve this problem.

We know this legislation is not perfect but we believe the old adage of “don’t let the perfect be the enemy of the good “applies here.

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116



TO: Members of the California State Senate and Assembly

FROM: California Small Businesses in Support of Workers’ Comp Bill

DATE: August 29, 2012

RE: SB 863 (De Leon) - Workers’ Compensation Fair & Balanced Reform – SUPPORT

We, the undersign California Small Businesses write to STRONGLY SUPPORT SB 863 (de Leon), that will ensure a fair and balanced approach to correcting our costly and inefficient workers’ compensation system.

We support SB 863 that will correct the inefficiencies of our state’s workers’ compensation system. This legislation accurately identifies key problem areas as identified in the numerous reports produced by the California Commission on Health and Safety and Workers’ Compensation. SB 863 will provide the corrective measures to reduce costs to small businesses, and based on the savings achieved, will provide a reasonable benefit increase to injured workers.

Enactment of Senate Bill 863 is necessary now before projected rate increases hit an all- time high. California employers paid $16.2 billion for workers' compensation in 2011, and the cost continues to rise. The Workers' Compensation Insurance Rating Bureau (WCIRB) recently approved an 18% rate increase on California businesses, while industry analysts also predict even greater hikes next year. SB 863 will prevent these increases on small businesses, while also fixing the systemic problems identified by the stakeholders.

Senate Bill 863 will redirect benefits to increase payments to disabled workers, while taking the corrective steps to reduce unnecessary disputes and litigation. These steps include better oversight of the Medical Provider Networks, the establishment of fee schedules that would keep fees paid at a consistent level, and significantly reduce lien claims by providers who treat injured workers and who are not in the employers’ network.

Projected savings of up to $1.3 billion can be saved by reducing expenses for liens, out-of-network treatment disputes and other unnecessary expenses that keep small businesses’ premiums on the rise. Injured workers would receive approximately $700 million in additional compensation benefits and California employers would save up to $800 million.

California’s Small Businesses who strongly support SB 863 (Lieu) urge the Legislature to approve this bill before the 20111-12 session adjourns. Small Businesses simply cannot afford another 18% increase in their workers’ compensation premiums next year. We are confident that the provisions included in SB 863 will significantly reduce the wasteful spending of our premium dollars so that injured workers can receive the reasonable benefit increases that they deserve.

If you have any questions, please contact me directly at 415.680.2109 or Or, you may contact our Governmental Advocate in Sacramento, Lori Kammerer, Kammerer & Company, at 916.441.5674 or at

cc: David Lanier, Legislative Policy Unit, Office of the Governor

The Hon. Marty Morgenstern, Secretary, Labor and Workforce Development Agency

Ms. Christine Baker, Director, Department of Industrial Relations

Kevin De Leon, Senator,(D-Los Angeles)

The Honorable John A. Perez, Speaker of the CA State Assembly

Mary Kaems, Special Asst, Speaker of the Assembly on Small Business and Jobs Development


1. Brand Source Pacific Rim Region

2. California Association of Competitive Telecommunications Companies

3. California Employers Association

4. California Fence Contractors’ Association

5. California Chapter of the American Fence Association

6. California Independent Oil Marketers Association

7. California Metals Association

8. Coalition of Small and Disable Veteran Businesses

9. Engineering Contractors' Association

10. Flasher Barricade Association

11. Independent Maintenance Contractors Association

12. Licensed Contractors of California

13. Oakland Metropolitan Chamber of Commerce

14. Northern California Independent Booksellers Association (NCIBA)

15. Marin Builders ‘Association

16. Monterey County Business Council

17. Pacific Automotive Recyclers and Machining Association

18. Plumbing Heating and Cooling Contractors of California

19. San Francisco Builders Exchange

20. San Francisco Council of District Merchants Associations

21. San Francisco Chamber of Commerce

22. San Francisco Small Business Network

23. Small Business California

24. The Coalition for Quality Affordable Health Care


1. Scott Hauge, President, CAL Insurance & Associates Inc, - San Francisco

2. Scott Hauge, Vice President, Clayscott Insurance Agency- San Francisco

3. Edward Kaplan, President, Kaplan Architects- San Francisco

4. Kay Reynolds, Partner, Tools for Business Success – Pine Grove

5. Sarosh Kumana, Owner, Pacific Investments – San Francisco

6. Barry Bochner, CEO, Biolog, Inc. – Hayward

7. Cathy Murphy, CEO, Home Instead Senior Care

8. Ron Purcell, Founder, RelQual Associates – Oxnard

9. Thea Selby, Principal, Next Steps Marketing – San Francisco

10. James Roten, CEO, Raven Office Centers – San Francisco

11. Syndi Seid, Founder, Advanced Etiquette- San Anselmo

12. Patty Schmucker, President, DoshaCare- Torrance

13. Elizabeth Fazzio, Vice President, Blue Heron Catering – Oakland

14. Sharon Ascencio, Principal, Ascencio Accounting & Business Services- Oakland

15. Elizabeth Parker, Tulsa Rib Company Restaurant and Catering- Orange

16. John Swan, Vice President, CompPartners – Irvine

17. Norman Garcia, President, Name-Finders Lists, Inc.- Oakland

18. Steve Paoli, President, Mission Bay Food Company – San Francisco

19. Edwin Caba, Owner, Creo La Bistro- San Carlos

20. Ruthie Norton, Sen. Vice President, CCI – San Francisco

21. James Stewart, President,Bayside Heating & Air Conditioning – Redwood City

22. Steve Diddams, President, Diddams Party & Toy- Mountain View

23. Richard Boehl, President, QTE North America Inc.- Rancho Cucamonga

24. Peter Abowd, Manager, Clock Four – San Rafael

25. Vicky Martinez, Owner, Bay Area Re-Roofing– Belmont

26. Bernard Poggetti, Owner, Capitol Electric – San Francisco

27. Thomas Wong, Marathon Packing – San Leandro

28. Mark Klaiman, Owner, Pet Camp- San Francisco

29. Stephen Cornell, Owner, Brownie’s Hardware – San Francisco

30. Meskerem Tadesse, Founder, The Optimize Group – Marina Del Rey

31. Timothy Moran, CFO, Conradshades- San Francisco

32. Tom Cebollero, Owner, Metric Motors – San Francisco

33. Alexandra McIntyre, CEO, RPM/Courier – Alameda

34. Michael Wan, Owner, Ebj Wholesale- Oakland

35. Jim Franzi, Owner, Elmack Cabinetry – Mill Valley

36. Linda Hannawalt, The Shop Around the Corner

37. Mitchell Bearg, Owner, Petline- San Carlos

38. Keola Caindec, North 37 Partners – Larkspur

39. Liz Palacios, Owner, Liz Palacios Designs – San Francisco

40. Elaine Kirk, Banker, Marks & Kirk – Oakland

41. Angelo Pucci, President, G.Pucci & Sons – Brisbane

42. Arnie Lerner, Principal, Lerner & Associates Architects – San Francisco

43. Eric Steckel, Vice President, Bars & Tone – San Francisco

44. Keith Ensminger, Principal, Kramer Translation- Merced

45. Stephen L. Dobrow, President, Primark Benefits- Burlingame

46. Norman P. Ishimoto, President, KI Associates- San Francisco

47. Henry Karnilowicz, Owner, Occidental Express- San Francisco

48. Dan Cerf, Owner, SF Party – San Francisco

49. Elliot Wagner, Manager, Dimitra’s SkinCare & MediSpa – San Francisco

50. Chris Goodwin, Owner, Plumbworks – San Francisco

51. Joanne Gomez, Owner, West Bay Plastics Inc- San Francisco

52. Jim Ross, President Jim Ross Consulting- San Francisco

53. Erin Casey, Manager, KC Glass – San Francisco

54. Renny Marin, President, California Bingo Service

55. Lee R. Petillon, President, Petillon Hiraide & Loomis LLP- Torrance

56. Greg Spry, President, Spryscapes Construction – San Francisco

57. Steven L. Isler, General Counsel & Tax Director, TaxCenters, Inc. – San Francisco

58. Kevyn Higgs, President, The Slanted Door Group – San Francisco

59. Luci Li-Akana, President, Akana Designs – Richmond

60. Spender Chan, Manager, Value Fire Protection – San Francisco

61. John O’Neill, Vice President, Cohn-Reid-O’Neill Insurance Services – San Mateo

62. Bruce O. Huff, Partner, The Kimber Companies – San Francisco

63. Constance M. John, President, MandalMed – San Francisco

64. Jeff Leopold, Partner, Standard 5 &10 Ace – San Francisco

65. Nancy Perata, CFO, Novani – San Francisco

66. Robert Mack, CEO, Biscotti – Oakland

67. Denise Collins, Owner, Aunt Ann's In House Staffing- San Francisco

68. Joe Mackey, CEO, XL Staffing & Security – El Cajon

69. Frank Barnes, CEO, Special Events Staffing- Pasadena

70. Shirley Patrick, Account Rep, Alpha Staffing Services, Rancho Cucamonga

71. Jackie Lance, Owner, Black Diamond Bags – Martinez

72. Mike Sterling, Owner, Sterling and Company – San Anselmo

73. Micheal Bennett, Owner, Bennett Tile Company

74. Angela Sisneroz, CEO, Medelect – Lincoln

75. Steve Fee, Partner, FME Architecture & Design – San Francisco

76. Judi Stiles, Owner, Stiles in Travel- Fair Oaks

77. Sharon Richardson, Principal, Ferrari Florist & Gifts- Santa Cruz

78. John Scott, CFO, The Little Giraffe – Van Nuys

79. Ben Stiegler, CEO, SYNERTEL Managed IT & Converged Communications Solutions- San Francisco

80. Steve Lang, Owner, Lang Roofing – Bell Gardens

81. John Miller, Owner, Regent Apparel – South San Francisco

82. Violeta Galang, Manager, The Futon Shop – San Francisco

83. Jann Fitzgerald, President, RapidRenu- San Francisco

84. Melissa Rich, President, InterSchola- San Francisco

85. Chrissy Dodds, Partner, Adaptive Technology Service – San Francisco

86. Gary Smith, President, Brandywine Communications – Tustin

87. Roanna Biedenweg, Owner, Sterling Tax Services- San Francisco

88. Jean Marie Lescohier, Corporate Secretary, Clipper Construction, Inc. – San Francisco

89. Brent Madsen, Owner, Anette’s Chocolate Factory – Napa

90. Mike Moller, Owner, Moller Realty Group – Corning

91. Vince McDonald, President, McDonald Plumbing Heating & Air – Sacramento

92. Valorie Green, Officer, Solana Investments – Mission Viejo

93. Helga Grayson, CFO, Thinknicity- San Francisco

94. Huy Dang, Owner, VanVy LLC, Laguna Hills

95. Patrick Shreffler, Owner, Emergency Management Consultants- Posey

96. Paula Tejeda, Founder, DBA Chile Lindo – San Francisco

97. Helen Medina, Owner, Parsons Lumber & Hardware – Boyes Hot Springs

98. Alice Thompson, President, Sage Cheshire Aerospace- Lancaster

99. Steve Lemmon, Owner, Great Clips – Walnut Creek

100. James Baird, CEO, Bay Area Development Company – Oakland

101. Moe Abbassi, CFO, Rdi Resource Design Interiors – San Francisco

102. Dave Chapman, President, Chapman Coast – Fullerton

103. John Cosmides, Founder, Barustors- San Francisco

104. Tim Hallen, Manager, Golden Gate Tank Removal- San Francisco

105. Jeff Yamaoka, Owner, Advance Cleaning Systems- San Francisco

106. Keith Goldstein, President, Everest Waterproofing & Restoration- San Francisco

107. John Withers, President Kesson Co- Rohnert Park

108. Randy Soso, President, Metal Building Company –Oakland

109. Sergio Raddavero, President, WCBS – San Carlos

110. Drumm McNaughton, President, The Change Leader – Fallbrook

111. Christine Richardson, President, O’Connell Jetting Systems – Benicia

112. Dennis Albrecht, Owner, Electric Laboratories – Fresno

113. Tom Lacey, President, Mission Business Center – San Francisco

114. Kevin Gray, President, Cornely Company – San Francisco

115. George Taddie, Owner, Tadco Supply – San Jose

116. James Hooper, President, Hooper’s Contract Management Services - San Martin

117. Vanessa Eckerman, Gutter Glove- Rocklin

118. Leonard Strickland, Owner, River Pointe Insurance Agency – West Sacramento

119. Laura Losquadro, CFO, Daisy I.T Supplies, Sales & Services- Rancho Cucamonga

120. Grace Santana, Owner, Santana Plumbing – San Francisco

121. Sarah Dvorak, Owner, Mission Cheese- San Francisco

122. Cliff Ishii, President, Ishii Engineering – San Francisco

123. George Salet, Owner, George Salet Plumbing- Brisbane

124. Janet Sahagun, Manager, Sahagun & Beebe- San Francisco

SB863 Urgent Action Needed Now/ SB 969/SB1234

I have sent emails to you regarding a major workers compensation reform bill SB863[De Leon]/. This bill will increase benefits which have been too low since the passage of 899 in 2004 and it will be more than paid for by cost saving in the system.

Small Business California and 19 other associations have sent a support letter.

In a letter from State Fund yesterday they said if the legislation passes they will recommend a 5% to 7% decrease in their rates. While numbers vary on the savings and cost State Fund has said after the benefit increase there will be a $543 million cost savings.

I am writing to ask all of you to sign onto a letter of support for SB 863. All you need to do is agree to this by return email and send me your company name and location. You will get a copy of the letter after we have all the names. This is your chance to make a difference.

In other legislation

SB 323. Small Business California has successfully gotten an amendment to this bill which would have previously required all existing LLCs to refile based on the new LLC rules in the bill. I encourage you to look at the bill to determine whether you would like to take advantage of the new rules but I suspect most of you will not want the additional cost. I estimate conservatively this will save over $1 billion for the business community.

SB969. This is the Pet Bill legislation that would have set up a state bureaucracy and provided an avenue for lawsuits against Pet Groomers. While animal abuse should never be tolerated there have been relatively few in the state and in our opinion is a solution looking for a problem. This bill is dead.

SB 1234- This is a bill that would have required all businesses with 5 employees to set up a retirement plan. This bill is dead.

SB2408- This bill would repeal the Net Operating Carry Back. Small Business California and 34 associations signed a letter opposing this. There were also 101 of you that signed a joint individual business letter. While this is not officially dead it does not appear to have the two thirds votes it needs

Please agree to sign the letter supporting SB 863

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


interview request on Your Call, KALW in SF

I have told you that there is workers compensation reform bill SB 863 that would make savings cuts in the workers compensation system and would increase benefits to employees. Today the Workers Compensation Insurance Workers Compensation Insurance Bureau came out with the savings and additional cost. The savings were $.4 billion and the cost $320 million.

I will be doing a call in show tomorrow. See below. Please give me your thoughts on topics.

From: Malihe Razazan []

Sent: Monday, August 27, 2012 11:25 AM


Subject: re:\interview request on Your Call, KALW in SF


I am Malihe Razazan with Your Call on KALW in San Francisco. We are doing a show about small business sector and how they are fairing in this economic environment as well as with all the rhetoric coming from presidential candidates and state politicians, who is really actually giving support to small business sector in the state?

Your Call is a daily public affairs program and it airs from 10 to 11 am

would you be able to join us?



Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


UPDATE: Workers Compensation/Injury and Illness Prevention Program

As I have said in previous emails workers compensation has become a troubled line of business for insurance companies. The combined loss ratio for the industry for this year is around 130%. I just received word that the Workers Compensation Insurance Rating Bureau has now recommended an 18% rate increase for January. This now needs to go to the Insurance Commissioner for his recommendation and I would expect he will recommend a lower increase. Once that is done insurance companies are not bound by the Insurance Commissioners recommendation but we are seeing insurance companies taking increases and reducing their credits.

The Bureau recommended a 10% increase July 1. I had a couple of representatives from the Bureau in last week. They indicated they wanted to do more for businesses and want to become more visible. If you have a question on what classifications your employees should be put into you can call them at 415-777-0777. If you have an experience modification you should get a copy of the Bureaus worksheet. Your broker should be able to provide this.

One bit of information that might be useful for those of you that will be getting your first experience modification is that you will be audited by the Bureau when you receive your new modification. If you already have a modification this is not necessarily the case.

How many of you have ever heard of the WCIRB?

I have written in previous emails that all businesses that have employees need to have a written Injury and Illness Prevention Program. This has been the case since 1991 and I still find that most small businesses don’t have one. You can do this yourself by going to or I have made arrangements with a consultant who will do this in most cases for $150 to $200. Contact me if you are interested.

Note you need to do more than write the plan and put it on a shelf. You need to talk about it with your employees. You need to have it available to all employees. This is the most prevalent fine OSHA gives.

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Thursday, August 16, 2012

Workers Compensation Reform/SB323/LLCs/ Affordable Care Act/ Willie Brown

A lot has been going on in Sacramento the last few days. I have learned more about the workers compensation reform package being offered. The estimates vary on the savings but a mid range seem to be about $800 million. As I said in a previous email the saving will be used primarily to increase permanent disability benefits. Small Business California will be tracking this very closely and I would expect our board to be strongly supportive of this proposal.

If you want the highlights of the legislation please let me know.

We continue to work on SB 323 which would require that LLCs refile based on the new rules put forth in the legislation. We are pushing strongly for an exemption for existing LLCs. I have just found out that there are over 603000 of these and the cost to these LLCs would I estimate be over $1 billion.

We received word from the Secretary of State yesterday that it is their opinion existing LLC s would be exempted. The authors office agrees there should be an exemption and has drafted an amendment to do so. The problem is the language is somewhat ambiguous and we are trying to tighten it. The stakes are too high not to nail this down.

Small Business California is the lead organization fighting for this.

The Net Operating Loss Carry Back bill AB2408is still on the table. This will eliminate the ability of businesses to file for a Net Operation Carry Back. It now appears it will be coming up next week. Small Business California has sent a floor alert asking the legislators to oppose. We have two letters. One signed by 34 associations and one signed by 101 small businesses around the state. It will take a two thirds vote to pass and we expect to be successful in killing this awful bill.

An interesting and disturbing development with the Affordable Care Act. There is an interpretation that if an employer pays for the employees health insurance and not family members that the family would not be eligible for the subsidies. In my opinion this would be terrible and may force employers to drop coverage. Most small businesses if they provide coverage do not pay for family members.

Last I had the pleasure of going to lunch with Willie Brown yesterday. I brought my niece Kelly who is working on her masters in conflict management.

Mayor Brown charmed the sox off my niece and he agreed to read her thesis when it is completed.

You may not like Mayor Browns politics but he is brilliant and no one understand California politics better than him.

By the way he is an LLC and strongly agrees that he should not have to refile.

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Friday, August 10, 2012

BOE Update/SB323/Workers Compensation/ATT

Please see below news release from BOE indicating that this month 13,160 letter are being sent to retailers. Note that since 2008 BOE have visited 324000 businesses to verify that retailers and businesses are registered with a sellers permit..

I have written about our efforts to get a grandfather provision on SB 323. This bill as written would require all LLCs that have been filed since 1994 to refile under new provisions in the bill. There are 10s of thousands of these . I have talked to an accountant and attorney to see what the cost will be for these LLCs. At the very low end it will cost each LLC $6500. This assumes 20 hours of attorney time at $250 per hour. This is really low. This of course does not include the many hours a business owner will have to spend.

The resistance to this is coming from the Secretary of State who takes the position that this will create problems for them because they will have to keep two sets of records. So businesses may have to spend millions of dollars because of this bill.

A deal seems to be in the making in Sacramento on workers compensation. Labor unions and large employers have been meeting since April to put together legislation that according to Mark Lifsher in the LA Times “ would cut administrative, legal and medical cost enough to fund a significant boost in benefits paid to workers who suffer permanent disabilities from job related injuries or illness”

Rates for workers compensation according to Lifsher have gone down 60% since the reforms of 2004 but it is pretty much a consensus that permanent disability benefits need to be increased. The key for employers is obviously that the cuts will offset the increases.

What I am hearing is that a deal is imminent.

In a prior email I provided an email about a small business that was having problems with their contract from ATT. He was being charged for services he did not request and increases that were incorrect. He pointed out that ATT needed to make the contracts more understandable.

As a result I got a call from the CPUC asking if a meeting could be set up with Small Business California and a representative of ATT. I would like to her your stories not only about ATT and other utilities.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116


Cynthia Bridges
Executive Director

State Board of Equalization
News Release

NR# 81-12-S
Date: August 9, 2012
Contact: Jaime Garza
Phone: 916-327-8988
BOE Newsroom

BOE Visits Retailers Statewide to Check Business Permits
Retailers and Businesses Notified of SCOP Team Visits

Sacramento – Retailers and businesses in 17 California zip code areas can expect to receive letters from the Board of Equalization (BOE) notifying them about visits from Statewide Compliance and Outreach Program (SCOP) teams. The visits are intended to educate retailers and business owners on sales and use tax reporting responsibilities, increase tax compliance, and help make the state’s tax system fair and equal for all Californians.

This month, 13,160 letters were sent to retailers and businesses in the following zip codes: Bell Gardens (90201), Walnut (91789), Valley Center (92082), Calimesa (92320), Sun City (92585 and 92586), Newport Beach (92660, 92661, and 92662), San Diego (92107), Morro Bay (93442), Nipomo (93444), San Francisco (94109 and 94133), Sunnyvale (94087), Crescent City (95531), and Smith River (95567).

Since 2008, the BOE SCOP teams have visited more than 324,000 businesses statewide to verify that retailers and businesses are registered and to make sure that noncompliant businesses do not have an unfair advantage over registered businesses that are reporting their sales and use taxes and/or fees to BOE.

Seven SCOP teams located statewide (Oakland, Sacramento, San Jose, Van Nuys, Norwalk, Irvine and Riverside) conduct door-to-door in-person visits based on zip code. They check seller’s permits at stores and other known retail and business locations. They ask only business-related questions and do not inquire about personal financial information. SCOP teams check that registered retailers, as well as service industry businesses, have appropriate permits and licenses. Businesses found to be out of compliance are given instructions on how to register with the BOE and given information about other necessary licenses.

BOE has found that only about 2 percent of businesses operating in California do so without permits or licenses that allow for collection of sales and use taxes and other taxes and fees. However, noncompliance is a contributor to the more than $2 billion sales and use “tax gap” – the difference between the amount of taxes owed and the amount of paid.

If business owners have questions, they may contact their local BOE SCOP Team in Oakland, Sacramento, San Jose, Van Nuys, Norwalk, Irvine or Riverside, or visit the SCOP website.

* * * * *

The five-member California State Board of Equalization is a publicly elected tax board. The BOE collects more than $50 billion annually in taxes and fees supporting state and local government services. It hears business tax appeals, acts as the appellate body for franchise and personal income tax appeals, and serves a significant role in the assessment and administration of property taxes. For more information on other taxes and fees in California, visit


Wednesday, August 08, 2012


Yesterday Lori Kammerer Small Business California government affairs person, Lee Petillon Board member Small Business California and I testified on Small Business California sponsored bill AB 2081 before the Senate Banking and Finance committee[Allen]. This bill would authorize the solicitation of accredited investors. It is similar to the JOBS bill passed in Washington but would give investors 10 or 11 protections that probably will not be in the SEC regulations which are expected August 22. The bill passed 4 to 2 with one abstention. It now goes forward to Senate Judiciary. Opposing the bill is AARP and the Public Investors Arbitration Bar Association. It is their belief that the bill does not provide enough protection for investors especially seniors.

It is an interesting position as the JOBS bill will most likely provide little or no protection and California investors will be left with only that option.

It is expected that SB 1234[DeLeon] will be coming before Senate Appropriations today. This bill would mandate that all businesses with 5 or more employees would be required to set up a retirement plan for their employees. It does not require an employer contribution and allows employees to Op Out. Small Business California opposes this because of the mandate and the cost to the state which is estimated to be somewhere between $100 million and $600 million.

The lobbying on this has been extensive supported by unions and opposed by Small Business California , California Chamber, the Financial Industry and other business groups. Should it pass Appropriations and the Senate it will go to the Governor. It is not clear if the Governor will veto the bill.

Scott Hauge

Small Business California

Tuesday, August 07, 2012

Bank of America/Mike Garcia Meeting

Numerous articles have been written about the liabilities of small business for theft by third parties from business bank accounts. Please see response below from Bank of America. I strongly recommend you contact your bank as to what their policy is.

I applaud Bank Of America and Dave Legnitto for clarifying. See below.

We will be sending the letter to legislators opposing the repeal of the Net Operating Loss Carry Back. We had 34 associations opposing this and 101 individual businesses opposing. Thank you to all that responded. We are going to stop this legislation.

I received an email from a reporter in Sacramento asking about how small business feels about the Affordable Care Act. She is looking for responses from businesses in the Sacramento area. Do you support the ACA?Do you plan to move your health insurance to the Exchange? Will you drop your insurance? Will you continue to offer insurance outside the Exchange?
For those of you in SF I have put together a meeting with Supervisor candidate in District 7 with Mike Garcia at my office at 2311 Taraval at 8AM August 8.. Are you interested in attending

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116


This Information was found in Bank of America’s Online service agreement which is located on bank of america’s website:

If your information is compromised due to malware and an unauthorized transaction occurs: The business client has zero liability as long as the transaction is reported to us within 60 days at the latest, we want immediate notification but do allow this window, from when the transaction is seen on your bank statement.

If your passcode is stolen by being hacked into: The business client also has zero liability but must follow the above reporting guidelines. There is one nuance to this and it is as follows:

Bank of America will have no liability to you for any unauthorized payment or transfer made using your passcode that occurs before you have notified us of a possible unauthorized use and we have had a reasonable opportunity to act on that notice. We may suspend or cancel your passcode even without receiving such notice from you, if we suspect your passcode is being used in an unauthorized or fraudulent manner.
An example of this would be if a fraudulent transfer or unauthorized payment $5,000 occurred on august 1st and the business owner did multiple transactions after this point and another fraudulent transaction occurred on august 30th , it would be reasonable to assume the client could have checked into his balance and notified the bank, thus allowing the bank to take action from allowing future fraud. In this case the business owner would be potentially liable for the losses incurred.

Dave Legnitto
Vice President
Bank of America Small Business Banker
345 Montgomery St.
San Francisco Ca, 94104
Tel. 415.816.8693
Fax 415.844.2735

UPDATE: Please Help Us Help You /Net Loss Carry Back

A huge thank you to all of you that have agreed to sign onto letter. If you have not done so already please send me an email agreeing to sign letter. Be sure and give me your address.

We now have 35 associations around the state signing the letter below and my goal is to get over 100 businesses to sign onto the letter. Please feel free to forward to all your business colleagues. I don’t think there is an association in California that could have done this.

Just so you know this is not all we are working on. SB 323 has been introduced which would require all LLCs to refile with the state by 2016. This is going to cost businesses considerable legal fees and create great confusion. We are in contact with the authors office asking that they include a grandfather clause for businesses that have filed since 1994. I will let you know what happens.

There is no other association in California that is working on this.

I hope you can see the value of Small Business California and our efforts to represent you. If you are not a member already please consider joining. You can do so by going to

Scott Hauge


Please Help Us Help You /Net Loss Carry Back

Please see below letter we are sending with 28 associations around California signing. We expect to have a couple more before we send.

Now I need your help. We want to send a letter with individual businesses. My request the other day did not get much response. Can we add your business to a similar letter. I think this is pretty noncontroversial and we need to show the legislators individual businesses agree with these associations.

To sign all you need to do is tell me it is okay and send me your address. We need to complete this by Monday.

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116



July 17, 2012

The Honorable Christine Kehoe
Chair, Senate Committee on Appropriations
California State Capitol
Sacramento, CA 95814

RE: AB 2408 (Skinner) – OPPOSE - Elimination of Net Operating Loss Carry Back

Dear Senator Kehoe:

The associations listed below, who represent the 3.2 million small businesses in this state are Strongly Opposed to AB 2408 that would entirely eliminate small businesses’ ability to carry back their Net Operating Loss, resulting in significant impacts on small businesses and start-up companies.

Small Business is the engine that drives California's economy. Our state’s small businesses create most of the net new jobs at significant financial and personal risk. Many small businesses, as well as new businesses, nearly all of which are small by definition, must endure several years of losses before profitability can be achieved. This is particularly true in a down economy. Therefore, AB 2408 comes at an especially bad time for small businesses that are trying to get through these difficult times.

Although this proposal has been characterized as a measure that will close a loophole for large corporations, in fact, it will impact 6-7 small businesses for every large business affected. This would be particularly harmful to small businesses in cyclical industries, small businesses that have been affected by the downturn in the economy and small businesses who want to invest in their company to create more jobs for the people in California.

AB 2408 would suspend the ability of a small business to carry back losses and prevent them from growing or investing in their business.

Even without AB 2408, federal tax law and the laws of most other states already treat net operating loss carry backs significantly more favorably than existing California law. We believe that suspending the NOL is bad for the economy in California, but is especially harmful to small companies.

Therefore, the Associations listed are in Strong Opposition to AB 2408 and respectfully request you vote NO on this measure.

Thank you for your consideration and we look forward to answering any questions that you may have. Please contact Scott Hauge, President of Small Business California at 415.680.2109 or Lori Kammerer, Kammerer & Company, SB Cal’s Governmental Relations Advocate at 916.441.5674.


Associated Builders and Contractors of California
Building Owners and Managers Association of San Francisco
California Association of Competitive Telecommunications Companies (CALTEL)
California Association for Micro Enterprise Opportunity (CAMEO)
California Chapter of the American Contractors’ Association
California Employers Association
California Fence Contractors’ Association
California Metals Association
Engineering Contractors' Association
Flasher/Barricade Association
Golden Gate Restaurant Association
Insurance Brokers & Agents of the West
Los Angeles National Association of Women Business Owners
Marin Builders’ Association
Napa Chamber of Commerce
Oakland Metropolitan Chamber of Commerce
Plumbing Heating and Cooling Contractors of California
San Diego Regional Chamber of Commerce
San Francisco Builders Exchange
San Francisco Chamber of Commerce
San Francisco Council of District Merchants Associations
San Francisco Hispanic Chamber of Commerce
San Francisco National Association of Women Business Owners
San Francisco Small Business Advocates
San Francisco Small Business Network
Small Business California
Small Business Majority
Small Manufacturers Association of California

Net Operating Loss Carry back/ Liability from theft of your Bank Account/ IT Vendor

I have written previously about AB 2408 which would repeal the Net Operating Loss carry back. This is an awful bill and will hurt small businesses as they will be prohibited from carrying back losses for two years. As an example say in 2010 and 2011 you made a profit and in 2012 you suffer a loss. The repeal of the carry back provision would not allow you to carry back the losses into the two profitable years You may however carry these losses forward.

This runs counter to federal tax law and will have a negative impact on small businesses investing in their business and will be bad for the economy of California.

Small Business California has put together a letter of opposition and we have about 15 associations around the state signatory to the letter. We will be putting together a letter for individual business and if you have not already agreed to sign onto the letter p[lease let me know if you would sign. I will send a copy of the letter to you when we have all the company names/.

For more information on this bill go to

Businesses can be held responsible for theft from their bank account if their password is obtained by a third party. This may occur because of malware and a Trojan horse that gets into their computer or if their computer is breached. I suggest you contact your bank to see what protections you have. Ask them what happens if you computer is breeched by malware or if your computer is breached.

Do you outsource your IT functions to vendors and entrust sensitive data to these third parties? If so take a look at your contract with them. There are usually four types of contracts.

1.The contract has a full indemnity clause protecting you from a loss. This is the ideal contract

2.The contract has a cap on losses. Take a look at the cap and determine if this is enough to cover a loss

3. The contract has a limitation of liability. Usually this will be amount you have paid the vendor for services. This most likely will not cover your loss.

4.A disclaimer of consequential damages like business interruption. This should be rejected.

I think you will be surprised when you look at your contract. If any of you have a full indemnity provision please let me know.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116


I have received numerous emails on the question of contracts raised by Susan. Here are a few of the comments I received with some advise that may be helpful. If you have a problem that you think effects a lot of small businesses around the state let me know.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116


Hi scott,

Stuck in a similar situation, I wrote a letter outlining how they had not met their contractual service obligations, and notified them I wd stop pmt, and asked for refund.

They stopped service.

Also, you can threaten class action suit for unfair business practices CAL. BPC. CODE § 17200 : California Code - Section 17200. After this step, I got very quick personal call from head counsel for Xerox, and they stopped charges the contract retroactively.

“unfair competition” shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.

Pl pass on, and feel free to publish to other small biz owners.




Regarding the situation posed by Susan Frey. Yes, the “evergreen” contracts are a problem. My advice is to set a calendar schedule for the renewal of these contracts and begin review and negotiation within the timeframes set out by the agreement. Even if negotiations are under-way, it is in your best interest to serve a notice of intent to terminate within the timeframes. If you don’t, the negotiations will not proceed in a favorable manner because the company knows they can delay the process until you are stuck for another year.


Karen Preisser

Phone: 530-949-4439

Fax: 530-247-1840

Susan brings up an ongoing problem with us as well --- it is in regards to our telephone service in our stores where we use AT & T. They are now mirroring the cellphone industry contract provisions with their landline telephone service. For example in order to have affordable telephone service our business is required to purchase minutes plans, calling area plans, long distance plans, 800 number minutes plans, etc. and all of these plans have contract periods that we are required to adhere to;and to top it off, if we cancel any of these plans, there is an early termination fee. Now, I have an MBA in business and I am not able to figure out many of their plans and I find that their customer service people are not very well trained in the differences between plans, so it is a "crap" shoot and hope for the best. And if you do not call the AT & T outsourced telemarketing company to discuss your telephone service before the end of your contracts, if the same plan is still offered, you are automatically renewed and if the plan is not offered AT & T picks a plan for you. All of this infuriates me as I have other things to do than sit on hold with AT & T to discuss telephone plans. Just this week we received a booklet in the mail from AT & T indicating that we ordered new telephone service;we did not order any new service. Apparently they "slammed" our Oakland store on July 20th and called the Oakland store and asked our Store Manager if he wanted faster DSL and he said yes;they never told him that he was requesting a $30.00 more a month DSL service, or an additional $360.00 per year. Yesterday I tried to have this extra $30.00 per month charge removed and work this out with the customer service people at AT & T and basically I was told that I am stuck .... Thus, I made a call to the President of AT & T's office for help. First of all, the records at AT & T clearly state that I am the only authorized person to make any changes in telephone service, and they have to contact me in our San Francisco location. Secondly, I learned this AM that the "slamming" techniques that the outsourced AT & T telemarketing firm used on us is illegal. Scott, I am convinced as the economy continues to worsen, many companies will be doing the same thing to small business as small business has always been a preying ground for the "big gorillas" !

Best regards and have a wonderful weekend,

Michael A. Gardner
Great American Mercantile Co., Inc.
Siegel's Clothing Superstore & Tuxedos
Siegel's Tuxedo Shops
2366 Mission Street
San Francisco, California 94110-1814
Tel: (415) 824-7729 Ext. 15 Fax: (415) 824-7256