Why is it so hard to hire employees in California?

The "official" rate of unemployment in California is a sparkling 4.7%, and according to state labor experts, the job market is tightening.

But how many more people would be employed if it weren't so darned expensive to hire and keep new people on the payroll?

How expensive?  Here are the real-world consequences of government policies that make it so easy for employees to sue their companies for a variety of imaginary offenses.

Coyote Blog:

California is a uniquely difficult place for companies trying to actually employ people rather than robots.   Owning a business in that state, you could be forgiven that the legislation actually embarked on a program to explicitly punish companies for hiring people.  The state has spent the last ten or twenty years defining a myriad of micro offenses employees for which  may sue employers and make large recoveries -- everything from having to work through lunch to having the wrong chair and not getting to sit in that chair at the right times of day.

To illustrate this, I want to show you the insurance application I just received.  Most companies have something called employment practices liability insurance.  This insurance helps pay legal and some settlement expenses if and (nowadays) when a company is sued by an employee for things like discrimination or harassment or any of the variety of sue-your-boss offenses California has established.  In that multi-page application, after the opening section about name and address, the very first risk-related question asks this:

They specifically ask about your California employment, and no other state, in order to evaluate your risk.

The other insurance-related result of California's regulatory enviroment is that if one is in California, it is almost impossible to get an employee practices insurance deductible under $25,000.  This turns out to be just about exactly the amount of legal costs it takes to get a nuisance suit filed with no real grounding dismissed.  It essentially means that any disgruntled ex-employee, particularly one in a protected class, can point their finger at a company without any evidence whatsoever and cost that company about $25,000 in legal expenses. 

California is not likely to follow Missouri's lead, but the state illustrates how out-of-control lawfare against companies has gotten.  It's no wonder that most companies settle employee lawsuits when the alternative is not only a long legal battle, but potentially millions in damages.

The system is rigged against companies.  The idea that they are innocent until proved guilty is out the window.  A company doesn't even have to intend to discriminate.  It can be held liable if the number of minorities it employs is below that of similar businesses with a similar number of employees.

When it becomes so easy to file a lawsuit alleging discrimination or sexual harassment with a good chance of winning, why bother to work when you can reach into the deep pockets of a company for a big payday?

The "official" rate of unemployment in California is a sparkling 4.7%, and according to state labor experts, the job market is tightening.

But how many more people would be employed if it weren't so darned expensive to hire and keep new people on the payroll?

How expensive?  Here are the real-world consequences of government policies that make it so easy for employees to sue their companies for a variety of imaginary offenses.

Coyote Blog:

California is a uniquely difficult place for companies trying to actually employ people rather than robots.   Owning a business in that state, you could be forgiven that the legislation actually embarked on a program to explicitly punish companies for hiring people.  The state has spent the last ten or twenty years defining a myriad of micro offenses employees for which  may sue employers and make large recoveries -- everything from having to work through lunch to having the wrong chair and not getting to sit in that chair at the right times of day.

To illustrate this, I want to show you the insurance application I just received.  Most companies have something called employment practices liability insurance.  This insurance helps pay legal and some settlement expenses if and (nowadays) when a company is sued by an employee for things like discrimination or harassment or any of the variety of sue-your-boss offenses California has established.  In that multi-page application, after the opening section about name and address, the very first risk-related question asks this:

They specifically ask about your California employment, and no other state, in order to evaluate your risk.

The other insurance-related result of California's regulatory enviroment is that if one is in California, it is almost impossible to get an employee practices insurance deductible under $25,000.  This turns out to be just about exactly the amount of legal costs it takes to get a nuisance suit filed with no real grounding dismissed.  It essentially means that any disgruntled ex-employee, particularly one in a protected class, can point their finger at a company without any evidence whatsoever and cost that company about $25,000 in legal expenses. 

California is not likely to follow Missouri's lead, but the state illustrates how out-of-control lawfare against companies has gotten.  It's no wonder that most companies settle employee lawsuits when the alternative is not only a long legal battle, but potentially millions in damages.

The system is rigged against companies.  The idea that they are innocent until proved guilty is out the window.  A company doesn't even have to intend to discriminate.  It can be held liable if the number of minorities it employs is below that of similar businesses with a similar number of employees.

When it becomes so easy to file a lawsuit alleging discrimination or sexual harassment with a good chance of winning, why bother to work when you can reach into the deep pockets of a company for a big payday?

RECENT VIDEOS