Monday, July 29, 2013

Lee Petillon

It is with great sadness that I let you know that  Small Business California  Board member Lee Petillon died last Friday at the age of 84.  He was a giant in security law and in early stage technology development. He was a prolific writer and author of  numerous pieces of legislation around  security law. He also was my friend helping me and other Board  members  to guide Small Business California.

He will be greatly missed as he was one of the kindest people I ever met and feel it was a privilege to know him.

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

Friday, July 26, 2013

Independent Contractors/ SBDC

The state is embarking on a project having to do with independent contractors. This has been a big issue for small business that cuts two ways.

First I have heard from some of you that you face competition from competitors who are paying cash under the table. This is done to  avoid  withholding and payroll taxes and in many cases your competitors don’t have works compensation.  I have also heard from some of you that EDD will not go after businesses that you know are paying under the table. What ideas do you have to address this?

Second I have heard from some of you  that   you are not clear how to properly  document independent contractor status and some of you have been audited by EDD and ended up paying  penalties for lack of compliance. What can the state do to help small businesses. Do you know what resources are available to you?

I welcome your comments on both issues.

Yesterday I received notice that I have been appointed to the SBA National Advisory Board for the Small Business Development Centers. I am representing District IX. This includes Arizona,California,Guam Hawaii and Nevada. I welcome any comments about the SBDC program.

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

Thursday, July 25, 2013

Media contact/question

Are any of you aware of small businesses being put out of business by the Federal government. See story below. Do you have any thoughts?

Are any of you aware of situations where the state has taken away business from small businesses. I know some of the small businesses selling food products to the government have lost business because prisoners are selling to government agencies. It is my understanding they can’t even bid on this.
Are any of you impact by this.

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


Hello Scott,

I hope you’re doing well. We’re working on a story and wanted to get your thoughts on it. The story concerns a small business owner who is one of many across the country who will soon be out of business due to the Federal Government’s decision to sell their product themselves instead of continuing to contract out to sell their product. In this case the product is coffee, and it’s the VA who is canceling contracts for some businesses that have coffee shops inside the VA. They’re now going to be selling Starbucks brand coffee in their cafeterias instead of having him there selling his product which he has been for the last fifteen years.

How do you feel about a business being taken over by the feds

How often do the feds do this kind of wholesale takeover when independent contractors seem to be doing a fine job on their own?

What could be next – would other concession businesses be in the governments away??  Have they already gone away? Newstands? Shoe shiners?

What’s next?

Below is an article on this incident and background info – let me know.


Coffee Shop Owner: Getting Shut Down by V.A., Starbucks
By Gabrielle Karol

Published May 22, 2013

There's a coffee war brewing inside America's V.A. Medical Centers that threatens to oust long-established mom-and-pop businesses in favor of a Starbucks-affiliated chain.

At stake is more than a cup-o'-Joe - for a lot of vendors, it's their livelihood.

Ken Gilmore, who owns and operates Epiphany Coffee and Tea, which for 15 years has been serving up coffee and snacks inside the V.A. Medical Center in Sacramento, California, says the government-run agency has not extended his contract, and instead will open a PatriotsBrew, a chain shop already operating in more than 115 V.A. Medical Centers.

Stacy Papachrisanthou, the director of marketing and communications for the Veterans Canteen Services (VCS), says the conversion of contractor-run coffee shops into PatriotBrews comes from the desire to offer veterans and their families "a more consistent assortment" of healthier snacks and beverages, including Starbucks brand coffees.

Over the past five years, the PatriotBrew initiative has converted 30 coffee shop contractors to PatriotBrews. Papachrisanthou says when the vendors' contracts are up, they're given notice that their shops will change over to VCS management. At that point, owners and their employees are offered the opportunity to become employees of PatriotBrew.

That's one offer Gilmore says he can refuse.

Gilmore says he currently makes $3,300 a month running Epiphany Coffee and Tea - and the salary at PatriotBrew would only be $15 an hour.

"I'm the sole supporter of my family - I can't pay my mortgage on $15 an hour," says Gilmore. Even though the position would come with the benefits given to federal employees, Gilmore says the switch still wouldn't be worth it.

He adds he's been trying to cut back on stress since having two heart attacks, but the idea of having to start over In 90 days has been weighing heavily on his mind.

Will Veterans Pay the Price?

Gilmore says he sees the decision to oust contractors as financially motivated, rather than stemming from the desire to provide vets with more healthy options.

He says he has a contact within the V.A. who told him, "If they run everything and have licensing with Starbucks, they end up potentially making more than just having a vendor run it. It's my understanding that prices will be higher."

While higher prices could be less affordable for veterans patronizing the V.A.'s coffee shops, more revenue for the V.A. could help provide better services to veterans.

Papachrisanthou says the difference in price from contractor to PatriotBrew depends on the prices set by individual vendors.

In the case of the Sacramento V.A., Gilmore's hunch may be correct. He currently charges $1 for an 8 ounce cup of coffee, while Anthony Goolsby, the manager of the Los Angeles V.A. Medical Center's PatriotBrew, says that the price for a cup of coffee starts at $2 and goes all the way up to $5 for something more elaborate, like a latte or a cappuccino.

"I've tried to keep prices lower for the veterans," says Gilmore. "It's an opportunity to give back to those who serve the country, and a lot of them are on fixed incomes and can't afford a lot.

"I see the same people over the years, and I love hearing their stories."

Michael Lundin
Fox News Channel
San Francisco, CA
415-951-8550 (office)
415-359-5849 (mobile)

Tuesday, July 23, 2013

Job Creation/Bank Lending

Please see below job creation in California . It is clear that businesses in with 1 to 4 employees[micro businesses] are the  major net job creators in the state. SB Cal  Board member Terry Bibbens provided this information. He is a nationally known expert in job creation studies.

This is an up to date ranking of bank lending to small businesses. Where does your bank rank?

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

Friday, July 19, 2013

California Unemployment Tax

You all know that the state is about $10 billion in debt to the Federal Government for its payments on Unemployment. The Governor has put forth a proposal to solve this problem. Legislation will be introduced with the Governors proposal. It includes an increase in the Unemployment tax for employers and an increase in the cap which is currently $7000. It also addresses fraud.

I think you can safely expect an increase in the Unemployment tax in the future.

My question to you is what is your experience with employees filing for Unemployment? Have you been successful in fighting an unemployment claim?

Have you had employees lose in their initial claim only to be overturned on appeal? Do you fight claims or just let them go through?

I look forward to hearing from you.

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Tuesday, July 16, 2013

The Affordable Care Act 101 Weekly Webinar Series/ Volunteers In Medicine

Please see information about SBA webinars

The Affordable Care Act 101 with SBA & Small Business Majority

As part of a robust education and outreach effort, the Small Business Administration and Small Business Majority are launching the Affordable Care Act 101 weekly webinar series. Small business owners can learn the basics of the Affordable Care Act and what it means for their company and employees, including insurance reforms, the small business health care tax credit, the new health insurance marketplaces, and employer shared responsibility provisions. Each week, SBA representatives will walk through the key pieces of the law so that small business owners can understand the facts and make the best, informed decisions they can about providing health insurance for their employees.

The Affordable Care Act 101 will take place every Thursday from now through the opening of the marketplaces in October. Below are the registration links for the next four presentations. Registration for later webinars will be available shortly.

Thursday, July 18 at 12:00 PM ET: Click to Register

Thursday, July 25 at 12:00 PM ET: Click to Register

Thursday, August 1 at 2:00 PM ET: Click to Register

Thursday, August 8 at 2:00 PM ET: Click to Register

Thursday, August 15 at 2:00 PM ET: Click to Register

If you have any questions, please contact Chris Van Es at Please forward this announcement to any interested stakeholders.

You all have heard me talk about Volunteers In Medicine and the free clinics around the country using volunteer doctors, nurses, dentist and lay volunteers that serve the working uninsured. We have over 11000 volunteers Nationally. I along with Janet Reilly we opened one of these clinics called Clinic by the Bay in SF and I serve as Vice Chair of the National program.

I just heard today we opened our 95th clinic. It is located in Columbia South Carolina. We now have VIM clinic in 29 states. For more information go to

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Wednesday, July 10, 2013

New Report Shows Tax Reform Proposal Reduces Economic Growth, Especially In California


From: Christopher Arns []

Sent: Wednesday, July 10, 2013 12:24 PM

To: Scott Hauge

Subject: FW: New Report Shows Tax Reform Proposal Reduces Economic Growth, Especially In California

Hi Scott, what do you think about this report? Would this bill affect your members?

Best regards,

Christopher Arns

Capitol Reporter

Sacramento Business Journal

1400 X Street, Sacramento, CA 95818

(916) 558-7859

------ Forwarded Message

From: Russell Grote

Date: Wed, 10 Jul 2013 19:01:53 +0000

To: Christopher Arns

Subject: New Report Shows Tax Reform Proposal Reduces Economic Growth, Especially In California

Hi Christopher,

Tax reform is heating up in Washington D.C. and a proposal being floated by a number of policymakers is to limit interest deductibility, a key component of the tax code for businesses. Today, the BUILD Coalition released a new study that shows California takes a billion dollar hit if interest deductibility is limited to pay for tax reform(see our state-by-state impact analysis here ).

Overall, this Ernst & Young study found that limiting interest deductibility to pay for tax reform reduces economic growth in all industries; yet, it is being considered by Congress, Treasury, and a number of advocates as a way to raise revenue to lower tax rates.

This is a key issue within tax reform and would be interesting to your readers, especially business owners who understand the issue who are monitoring DC’s efforts on reforming our tax code.

Feel free to reach out with any questions.


Tuesday, July 09, 2013

Managing Your Credit

Small Business California helped the National Association of Credit Management develop a Commercial Credit Reporting fact sheet for small business It is entitled What every Every Company Needs to Know and provides small businesses the information they need to be able to manage their companies commercial credit profile.

Please see links to their press release and fact sheet

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Tuesday, July 02, 2013

BREAKING NEWS: Employer Mandate Delayed One Year - Hot off the press from PBGH Policy Team


Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


From: Anne Presson []

Sent: Tuesday, July 02, 2013 2:55 PM

To: Anne Presson

Subject: BREAKING NEWS: Employer Mandate Delayed One Year - Hot off the press from PBGH Policy Team

Importance: High

Attention Members: Bill Kramer just received the following email alert from POLITICO and we wanted to get the information out ASAP.

The Obama administration is delaying by one year the employer mandate to provide workers with coverage, according to a report by Bloomberg News.

It said two administration officials explained that the decision to push off the requirements until 2015 will come in regulatory guidance to be issued later this week. The move is a nod to employer groups, who have been asking for more time to implement the mandate.

Administration officials were not immediately available to confirm the report.

Our Policy team will continue to monitor the situation and provide additional details as they become available.


Anne L. Presson, CEBS

Director, Member Relations

Pacific Business Group on Health

221 Main Street, Ste. 1500, San Francisco, CA 94105

Office: 415.615.6309 Cell: 415.999.5611 Fax: 415.520.0927

RTW Program/FUTA

The return to work piece below is a summary of State Funds guidelines. A link is provided for additional information.

One of the most effective ways to control workers’ compensation costs is to implement a return to work (RTW) program. An RTW plan can help an injured employee make an independent and successful return to work as soon as possible following an injury.

The longer injured employees are off work, the more likely they are to become permanently disabled. Injured workers who don’t return to work within 6 months have only a 50 percent chance of ever returning to the job held when they became injured. If the absence lasts more than a year, the chances of that employee returning to work drop to less than 10 percent.

Return to Work Programs Benefit Employers and Employees

A win-win situation for both the injured worker and the employer, an RTW program can reduce claims costs by getting the injured worker back on the job sooner through temporary modified duty. Numerous studies have shown that employees recover faster when they return to work.

RTW helps keep life as normal as possible for injured employees while they recover and integrate back into work. Economically, RTW may be able to help the employee retain stable income, benefits, and seniority. Additionally RTW helps the employee by reducing negative psychological effects such as disillusionment or anger at the loss of physical abilities or the ability to achieve career goals, and by fostering the positive effects of job security and interaction with friends and coworkers.

By implementing an RTW program you can:

• Improve morale among all employees.

• Gain control and increase potential for a positive resolution of the claim.

• Reduce or avoid temporary or permanent disability payments.

• Reduce medical costs.

• Reduce or avoid litigation.

• Discourage fraudulent claims.

• Avoid the replacement and training costs of hiring a new employee.

• Identify cross-training opportunities that enhance employees’ abilities in their regular jobs.

• Increase awareness of safe work practices and injury prevention.

For more information, please see link:

I think you all know that California Unemployment is in debt about $10 billion to the Federal government. Small Business California is working with other business organization to find solutions to the problem. See below projected charges for California employers.

Employer’s Federal Unemployment Tax (FUTA)

Tax Year Annual Federal Tax Increase


(+ 0.3% per year) Tax Increase Per Employee $21 per year Total Increase for Employers Statewide

(Year Tax Paid)

2010 0.8 $56

2011 1.1 (through June 30)

0.9 (June 30 – Dec. 31) $77 (through June 30)

$63 (June 30 – Dec. 31)

2012 1.2 $84 $290,000,000

2013 1.5 $105 $581,760,000

2014 1.8 $126 $893,832,000

2015 2.1 $147 $1,239,455,000

2016 2.4 $168 $1,916,567,000

2019 3.3 $231 $2,624,801,000

Tax increases continue until debt is paid or tax rate reaches 6%

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116