RELEASE: Small Business Roundtable Convened by Assemblywoman Petrie-Norris

COSTA MESA – At a small business roundtable held by the Chair of the Select Committee on Small Business and Entrepreneurship (SB&E), Assemblywoman Cottie Petrie-Norris; economists, business experts, and local business owners shared their thoughts on regulatory hurdles facing small businesses. This roundtable is the third in a series of hearings that SB&E has held over the last few months discussing pandemic recovery for California’s small businesses.

The roundtable opened with a brief update from the Assemblywoman on the Orange County oil spill: “Over the weekend, our worst fears came to life as oil spread throughout our beautiful ocean and onto the coastline. This is of course devastating to our marine life and environment, but this will also have a lasting impact on the local economy,” said Assemblywoman Cottie Petrie-Norris (D-Laguna Beach). “Our small businesses depend on tourism and traffic along the coast and will face an undeniable loss of revenue as a result of this crisis.” 

Assemblywoman Petrie-Norris noted that the responsible party is liable for any property damage or revenue loss caused by this crisis. Impacted businesses are encouraged to call (866) 985-8366, which is a hotline set up by Amplify and their partners to help impacted parties file claims and to also give out general information.

Following the update on the Orange County oil spill, discussions focused on cutting red and rationalizing regulations to ensure small business success. 

“We all know regulations are incredibly important for protecting employees and consumers, for protecting our environment and keeping all of us safe. But we also know that too often the State and local governments are weighing small businesses down with regulations that result in more burden than benefit,” said Assemblywoman Cottie Petrie-Norris, Chair of the SB&E Select Committee. “With roundtables like this, my Select Committee is identifying barriers and ways to make it easier to not only start a business, but to run a business in California.”
 
California’s complex regulatory system is not a new reality for our small businesses. Rather, it has only been exacerbated during the last 18 months as we faced the COVID-19 pandemic. As the 5th largest economy in the world, California is home to over three million small businesses. Small businesses oftentimes do not have the HR resources or legal consultants necessary to help navigate this web of rules. From navigating payroll requirements to changing worker classifications, small business owners are left with little time to actually grow and run their operations. 
 
According to Dr. Puri, Ph.D., Director of California State University, Fullerton's Woods Center for Economic Analysis and Forecasting; Orange County, and much of the state of California is living in a COVID-driven economy. Research over the last year and a half has shown that spending is dictated by the ebb and flow of the pandemic – the economy begins to recover when cases go down and declines as we experience resurging waves of cases. A recent survey of Orange County business expectations suggested that many believe that pandemic restrictions will last until 2023 and beyond. In addition, they regularly expect lack of income growth and are slowly losing confidence in recovery. However, on a more positive note, Orange County is still at 94.5% of pre-pandemic employment levels. According to Dr. Puri’s research, major concerns voiced by businesses in the last quarter of 2021 have been inflation, federal and state deficit, labor shortages, issues in supply chain, and tax increases.
 
Other panelists shared their thoughts on regulations that are hurting small businesses the most, including aspects of paid leave, COVID-19 protocols, lack of technical support, HR lawsuits and employment designation. One panelist noted that California has sixteen different paid leave programs. While these can result in reductions of labor costs and allow for greater retention of women, they simultaneously leave small employers overburdened. Additionally, panelists pointed out that ever-changing COVID regulations have put small businesses in a uniquely stressful situation – how to keep employees and customers safe, while not having to close their doors. Coupled with a large growth of remote workforces and accompanying regulations, small businesses are ill-equipped to meet these challenges. 
 
Furthermore, panelists suggested that a lack of technical and logistical support for small businesses pose barriers for small businesses to stay in compliance with these regulations without negatively impacting them. In addition to navigating the web of regulations, small businesses have been inundated with frivolous lawsuits for not adequately meeting these regulations. The advent of recent statutory changes regarding employee classification status as an independent contractor has left many small businesses gridlocked – continue to use previously economical independent contractors with a risk of not meeting the requirements or pay previously unbudgeted taxes and expenses on employees. 
 
Suggestions from local small business owners included streamlining the categorization of small businesses based on size, making local and regional regulations more cohesive, providing financial assistance for mandated policies, cutting back on bureaucracy and considering policy creation from the bottom up rather than top down. Small businesses cannot be broadly defined as under 100 employees, or even under 50. There are large discrepancies in what each small business looks like, from number of employees, physical size and income levels to name a few. Lumping all small businesses together is not a one size fits all solution – it is critical to individually evaluate the unique details of the sizes and stages of our small businesses. 
 
Business owners also noted their experiences when thinking about expansion and remarked that when businesses are thinking about expanding, or live on the borders of cities, they are often faced with conflicting regulations and barriers that include going through the permitting and start-up process all over again. When adopting regulations, local governments need to create them in collaboration with their neighbors and make it easier for small businesses to grow regionally. Running a small business is not cheap and they are often just skating by at the start. Lack of financial assistance for mandated policies makes it economically even more difficult for small businesses to stay afloat and meet regulatory standards. Navigating the bureaucracy of creating and running a small business is its own beast – this process needs to be made smoother, more efficient and more deliberate for our state’s entrepreneurs. 
 
Lastly, when developing these regulations, small business owners suggested that legislators need to address these issues from the perspective of a business owner. This bottom-up approach is often more inclusive and proves more successful for small businesses to put into practice. 
 
WHAT OTHERS ARE SAYING
“We are grateful to the Chair and Committee for convening this vitally important discussion. This has no doubt been the most challenging time in recent history for small-business owners who grapple with the unfortunate double whammy of shortage of labor and supply chain disruptions. Identifying and finding solutions to our onerous and costly regulatory climate is paramount to reopening Main Street and getting jobs and the economy back in full swing,” said John Kabateck, State Director, National Federation of Independent Business.
 
“Small businesses are the backbone of California’s economy and deserve every opportunity to thrive,” said Bianca Blomquist, Senior Policy & Engagement Manager, California for Small Business Majority. “However, many small business owners, especially those in under-resourced communities, don’t have access to the quality technical assistance they need to navigate complex programs and compete for a talented workforce, while also building wealth for themselves and their local communities. That's why we must continue to support programs that protect our local entrepreneurs from unfair competition and support policies that work to level the playing field.”
 
"I want my HR department to be about helping team members grow, not to enforce the government's rules. When the government stops listening, you have to make decisions on your own, you keep going," said Victor Peña, Owner and CEO, OmniPrint International, Irvine.
 
“Let’s make sure we don’t treat business owners like the bad guys, it's not easy over here and piling on with regulations, fees, mandates, restrictions, ambiguous rules doesn’t make it any easier,” said John Ursini, Co-Owner, Newport & Naples Rib Company, Costa Mesa.
 
“I have always been grateful that my business successes have allowed my passion for continued philanthropy,” said Heidi Miller, Owner of Tight Assets and Founder of Heidi’s Frogen Yozurt Shoppes, Laguna Beach.
 
“The definition of what a small business is should be reviewed. A company like mine, with 20 employees and under 2 million in revenue per year has nothing in common with a company with 250 employees and 40 million in revenue, yet we are both seen as small businesses. We have different issues, different needs and we often feel underserved and underrepresented.  I would love to see some legislative changes in California that would be more tailored for the smallest of the small businesses,” said Korina Qu Petrozzi, Owner of the Plant Nerd, Inc., Huntington Beach.

“As policymakers, listening is much more important than talking, which is why I am glad I was able to hear from the Orange County business community about the challenges they’re facing and the ways we can solve them. Thanks to Assemblymember Petrie-Norris for her leadership in helping small businesses continue to thrive and bringing us all together today,” said Senator Tom Umberg (D-Orange County).

“There couldn’t be a more important time to discuss the issues facing California’s small, family-owned businesses, which have suffered immensely throughout this pandemic.  While my colleagues in the state legislature and I have been working to come up with solutions these last few months, there is still a lot of work to do to support this crucial sector of the economy. I am looking forward to a fruitful, educational discussion about how to build back a stronger small business economy,” said Senator Dave Min (D-Irvine).

"Although I was unable to participate, due to the OC Oil Spill, my staff and Assemblymember Petrie-Norris shared with me the feedback received from the Orange County business community on regulation challenges. Small and Local Businesses are important to the Second District and our priority remains on business recovery, economic development and removing barriers. Our office will continue to look for opportunities to advance business sustainability in Orange County," said Orange County Supervisor Katrina Foley.
 
“Costa Mesa’s business community is the backbone of our City. And while we are well known for our high-end retail, award-winning restaurants, it is the smaller mom and pop shops, who contribute so much to our economy and diverse culture. I am proud to be a supporter of small business,” said Mayor of Costa Mesa, John Stephens. 

“Whether it’s a local coffee shop or family owned restaurant, the success of small business is at the core of who we are as a city. They contribute to the strong neighborhood feel and sense of community that we all feel a part of here in Costa Mesa. Small businesses can always count on us to be their advocates,” said Mayor Pro Tem of Costa Mesa, Andrea Marr. 

“The City of Irvine is rated as one of the best cities for small businesses. We are proud to partner with the Assemblywoman in helping attract and retain small businesses by helping them navigate through the state’s regulatory hurdles,” said Vice-Mayor Tammy Kim.