In 1997 my wife and I took what little savings we had and the support of my father and formed a recycled clothing business. This year was going to be one of the best in our history.
Then Covid hit. In just three months, our business has gone from sitting atop a profit to barely hanging on.
And like our business, the state of California went from a $21 billion surplus to grappling with a deficit of $54 billion and counting.
As we navigate these challenges while reopening California’s economy, the business community will need to work closely with legislators to balance social needs with economic needs. We are looking ahead to a California that starts to reopen, but have concerns about how leadership has responded to Covid-19 and the effects of those responses on small-business owners.
Gov. Gavin Newsom recently signed an executive order giving a presumption of Covid-19 coverage for first responders, health care workers and other employees who work outside their homes during the pandemic. We agree wholeheartedly that all workers who acquire Covid-19 on the job should receive workers’ compensation benefits. However, we have concerns about the precedent that a broad rebuttable presumption sets. This means that all cases of Covid-19 are automatically considered to be work related — and entitled to workers’ compensation benefits — even if there’s no evidence of a workplace connection. As a small business with limited employees, we are looking at an astronomical increase in our costs.
We consider this to be an alarming overreach and extension of the workers’ compensation system, especially if local employers and struggling municipalities are the ones stuck with the bill. Certainly, workers should rest assured that if they contract Covid-19 while doing their job, the system will provide them with benefits. But likewise, small businesses should rest assured that they will not be on the hook for Covid-19 cases that are not work related. Unfortunately, some legislators see differently and are authoring bills that would institute a “conclusive presumption,” which would mean employers would have to pay for the Covid-19 illness even if there is no evidence it was related to work. While I appreciate the efforts of Assemblymembers Lorena Gonzalez (D-San Diego) and Jim Cooper (D-Elk Grove) to protect workers during this pandemic, the effects their legislation might have on my business could be devastating.
I started California Clothing Recyclers in 1997 with my wife, inspired by my father’s own clothing recycling business. Since then, we’ve become the leader of used clothing recycling in Northern California, particularly in the Sacramento metropolitan area.
We’ve hit rough patches before. When the market bottomed out in 1999, we couldn’t pay thrift stores for their materials anymore, so they let us pick up clothing anyway for free so they could avoid renting big trash containers. After the 9/11 attacks prompted a restructuring of global shipping networks, we didn’t turn a profit for nearly a year.
But the Covid-19 pandemic might turn out to be our biggest challenge yet.
Our team is small yet mighty; there’s less than a dozen of us in the warehouse, so you could say we were doing social distancing even before it was a CDC recommendation. We’re capable of reopening responsibly, but I also want my employees to know that their health comes first, and that if our precautions fail, there will still be a safety net in place for them if they test positive. To that end, we look to the workers’ compensation system.
The workers’ compensation system has continued to provide benefits to workers for more than a century. This is not the time to fix what’s not broken; any legislative changes could open the floodgates to false claims and take away resources from legitimate ones. It is vital to our state’s economic recovery that employers and public entities are not forced to pay for Covid-19 cases contracted outside of the workplace. Small businesses are already facing enough threats to their survival. They don’t need the finishing blow to come from a program meant to help them.
Marcus Gomez is the owner of California Clothing Recyclers in Sacramento.
This piece was originally published in the Sacramento Business Journal. To view the original piece, click here.
