2022 California Legislative Session

By Bianca Blomquist, California Policy Director

California’s small and microbusiness owners won a number of victories during the 2022 legislative session. The state continues to lead on healthcare initiatives that control costs, state benefits to enable small employers to create quality jobs, and a level playing field for small business owners, their employees, and the self-employed.

Governor Newsom’s commitment to paid family leave

Our research shows that access to affordable and quality healthcare remains essential to the success of long-term recovery for small businesses and must be included in future legislation efforts. This is why we were pleased to support Senate Bill 951, one of the biggest victories of the year that gives employers the ability to create quality jobs.

California’s Paid Family Leave (PFL) program levels the playing field for small business owners who want to provide quality jobs to their employees. However, thousands of low-wage workers were unable to participate because they could not afford the wage replacement rate. Smaller firms are supportive of a proposal to increase the wage replacement amount to 90% for low-wage employees. They want to offer critical benefits to their workforce, the same employees who are often seen as family. But most smaller firms don’t have the resources to provide affordable plans. We laud Governor Newsom's signing into law SB 951, which strengthens our state’s PFL program by making it more accessible to all California workers and small business owners who cannot afford a robust paid leave policy of their own.

Creating equity for California entrepreneurs

Street vending allows micro food businesses—many of whom are immigrants and/or low-income individuals—to run a business without high overhead costs and add vibrance to their communities. However, many of these vendors were forced to comply with outdated regulations that limited how much they could sell and how food was delivered. We were thrilled to support Senate Bill 972, a bill that brings thousands of micro-entrepreneurs into a more equitable and well-regulated food economy while enhancing critical health and food safety regulation. SB 972 removes barriers to accessing food vending permits by modernizing the California Retail Food Code (CRFC). We are excited to support the implementation of SB 972 across California’s 58 counties, providing opportunities for microbusinesses that are overwhelmingly owned and operated by people of color in low-income communities.

Microbusinesses received additional support from the governor when he signed Senate Bill 1126 into law, amending California’s CalSavers Retirement Savings Program (CalSavers). Now, small businesses with fewer than five employees will have access to the CalSavers Individual Retirement Account (IRA) program. The bill removes an inequity for the state’s smallest employers and allows them to access a no-fee, easy tool to aid in employee recruitment and retention. By expanding CalSavers, an estimated three-quarters of a million employees can access this important retirement savings program. This legislation will be helpful for most small businesses that usually do not have designated Human Resources departments and time to spend navigating complex traditional retirement options.

Recently, the Biden Administration set an ambitious goal of increasing the share of federal contracts going to small, disadvantaged businesses by 50% by 2025, which would translate to an additional $100 billion for these businesses; and a goal for 20% of federal procurement contracts set aside for women-owned businesses. Signing bills SB 2974, which set state agencies' goal of 25% small business inclusion in specific federal contracts, and AB 2019, which officially put the goal of 25% in statutory code and creates an accountability mechanism for departments who fail to achieve this goal in the past 3 out of 5 years, were welcomed compliments to the Biden Administration’s objective.

With billions of dollars in new contracting opportunities available to the state, we were happy to encourage legislation that opened the doors for small business owners to compete in meaningful ways for contracts. These bills will not only keep the state accountable, but it will give businesses that face systemic barriers a chance to succeed, create jobs and enrich their communities. This also ensures that a fair share of procurement spending is directed and dedicated to small and minority-owned small businesses, addressing long-standing inequities in government contracting.

Other wins

Additional wins for small businesses advanced during the 2022 California legislation include the following:

• SB 1407 California Employee Ownership Act - This bill helps to boost small businesses through employee entrepreneurship. Among the many small business-friendly provisions included in this bill, SB 1407 will support the transition of a business to employee ownership and strengthen franchisee protections to level the playing field and combat discrimination.

• SB 1138 Unemployment Insurance, Self-Employed - This bill will explore how to better support our state’s self-employed business owners. This bill requires a feasibility study that examines the idea of extending unemployment insurance benefits to the estimated 13% self-employed Californians.

• SB 644 Healthcare Outreach - This bill allows Covered California to conduct outreach to individuals who file a claim with the Employment Development Department (EDD) for unemployment or other benefits. This is vital to small businesses struggling to bring back employees or may be forced to lay off their workers again, and to solo entrepreneurs who have lost their income during the pandemic.

• AB 2670 California Regional Initiative for Social Enterprises (CA RISE) Program - This bill provides $25 million for business assistance to small businesses hoping to make a positive social impact by providing jobs, training and support to employees who have barriers to employment.

Looking ahead

While this year’s California legislative session produced fruitful opportunities for small business owners, we are disappointed that a few crucial bills were vetoed or did not advance. For example, AB 2080 - “Health Care Consolidation and Contracting Fairness Act of 2022,” which would have discouraged anticompetitive behavior in the healthcare industry, stalled in the legislature. Our research shows that the lack of competition hurts consumers and small businesses. Fewer and larger players having control over a market raises prices, and research confirms that markups have tripled. Market consolidation has also driven down wages for workers by as much as 17% nationwide. To influence effective change that supports innovation and small business growth, we must enact policies that combat anticompetitive practices, which result in creating an unequal playing field for small businesses. We were disappointed that the Legislator chose not to strengthen oversight over hospital mergers and consolidation by the Attorney General, a key measure to control healthcare costs and affordability for small business owners.

The governor’s decision to veto SB 944, a bill that would increase affordability for middle-income Californians is another disappointing blow to healthcare affordability. The bill specifically served as an option to reduce cost sharing in plans available through the exchange. Nearly 3.2 million Californians remain uninsured in 2022, or about 9.5% of the population aged 0-64. These Californias, many of whom are low-wage employees or small business owners, are worried about out-of-pocket costs when using health insurance. The bill would have improved affordability for tens of thousands of low and moderate-income entrepreneurs and small business owners, which spurs entrepreneurship in the state, especially among women.

Additionally, AB 2847 would help to support a sense of security for our state’s unemployed and vulnerable immigrants by creating an Excluded Workers Program for employees in California who are excluded from unemployment insurance. This would benefit the small business ecosystem by ensuring our eligible workers are able to contribute to local economies and California’s recovery, regardless of their immigration status. Similarly, AB 92 made the waiver permanent for low-income families who were required to pay a fee for subsidized childcare. Vulnerable workers, who were already struggling to maintain childcare and employment during the pandemic, now have a looming debt that could force them to choose between paying for childcare or running a business.

Small Business Majority is optimistic about the positive impact on the small business ecosystem that was created from investments in critical resources this legislative session. We are counting on legislators to continue to invest in robust policies and programs that ensure entrepreneurs have the resources they need to contribute equitably to the California economy. We look forward to continuing our work with Governor Newsom and the Legislature to ensure that California’s job creators remain a top priority in the next session.