Frivolous Lawsuit Abuse – Destroying Small Businesses And Jobs

Craig Huey Economics, Government 0 Comments

Overregulations meant for protection of individuals are causing more harm than good

Several regulations imposed by propositions or lawmakers oftentimes come with the belief that they are for the good of the people–to protect individuals from abuses businesses might impose.

   However, these regulations written by lawyers only cause more harm and promote more an abuse of power than protection.

Take, for example, Proposition 65. Businesses whose products that contain one or more of 900 chemicals regulated by Proposition 65 are required by California state law to put up a sign within their business.

   You may have seen these posted, but nobody reads them.

But unscrupulous law firms generate millions in profit from this proposition by suing small businesses that are unaware they have these chemicals on the premises or that they needed to post a sign. (Oftentimes, these chemicals pose no threats to individuals.)

   In 2011, 300 lawsuits were filed regarding Proposition 65, resulting in $12 million of profits for lawyers. I expect 2012 and 2013 will be even greater.

The winners: the trial lawyers and politicians. The losers? You, me and anyone buying the product who will be paying higher prices.

Companies will go out of business, people will not be hired, and some might even lose their jobs because the money goes to lawyers.

   This bill isn’t the only one that has caused trouble. Such frivolous lawsuits regarding a variety of laws have cost small business owners more than $200 million over the past 15 years.

The Americans with Disabilities Act is another small business-costing regulation. Money-hungry lawyers hunt down small businesses that don’t perfectly comply with regulations provided by the act, and lawyers will hit these businesses with $5,000 in fines when they don’t comply.

The point of these lawsuits is not to protect individuals with disabilities, but to rake in money at the expense of job creators.

What do you think? Have you seen this abuse? Email your thoughts to me at craig@craighuey.com.

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