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Michael Little: State bill would allow discounts to unemployed

It’s The Law

Posted: December 10, 2009 8:38 p.m.
Updated: December 11, 2009 4:55 a.m.
California is facing an unprecedented economic crisis. Unemployment rates are at record highs, and for many, job loss and/or significant reductions in wages are a common reality.

In today’s tough economic climate, it is imperative legislators at both the state and federal levels think creatively about ways to spur economic growth while assisting those who face unemployment.

One such measure reflects this “out of the box” type of approach.

Governor Arnold Schwarzenegger recently signed a bill that would protect California businesses that choose to offer discounts and other incentives to individuals who have been adversely impacted by the struggling economy.

Senate Bill 367 (authored by state Sen. Gloria Negrete McLeod) clarifies current law and establishes it is not a violation of the Unruh Civil Rights Act for businesses to provide discounts to groups of people who have been laid off, had their salaries reduced and/or have been furloughed.

This bill was supported by various consumer groups including the California Chamber of Commerce, the California Retailers Association and the Consumer Attorneys of California.  

SB 367 is borne out of a positive trend that developed from the bleak economic downturn, whereby many businesses agreed to offer special discounts and deals to those who are out of work or forced to reduce their salary. These special deals usually take the form of modest discounts on merchandise or services, special promotions such as “Furlough Fridays” or agreements to take back purchased products if customers find themselves out of work.   

SB 367 seeks to insulate these California businesses from the threat of litigation initially prompted by a handful of attorneys who characterize these efforts to help unemployed consumers as acts of discrimination.        

While the Unruh Civil Rights Act broadly seeks to afford all Californians with equal access to goods and services furnished by business establishments, the statute was enacted with the primary purpose of eradicating arbitrary discrimination based on sex, color, race, religion, ancestry, national origin and disability.  

Perhaps driven by the attorneys’ fees that can be recovered under the act, threats of litigation against various businesses have been levied by a few attorneys, asserting special discounts offered to unemployed customers violate the Unruh Act by failing to afford all Californians with equal access to these discounts and benefits.

Such arguments discourage California businesses from reaching out to help those less fortunate and trivialize the important fundamental rights the Unruh Act intends to uphold.

In response, SB 367 reassures business owners that discounts and benefits offered to assist unemployed consumers or individuals suffering from a significant reduction in pay will not open that business up to potential liability and litigation. SB 367, as codified California Civil Code section 51.13, states as follows:

“Any discount or other benefit offered to or conferred on a consumer or prospective consumer by a business because the consumer or prospective consumer has suffered the loss or reduction of employment or reduction of wages shall not be considered an arbitrary discrimination in violation of (the Unruh Civil Rights Act).”       

Under the protection of Civil Code section 51.13, it is the hope that California businesses will readily take to the tenants of SB 367 by assisting those in their communities who may need temporary assistance during this economic crisis.

Moreover, if these businesses are able to provide discounts and other benefits to unemployed customers, SB 367 can achieve an ancillary benefit of promoting economic growth as it is likely that these businesses will be rewarded with an increased (and loyal) customer base when the economy recovers from the current downturn.

Michael S. Little is an attorney with Poole & Shaffery, LLP, a law firm which provides general counsel and litigation services to businesses, community associations and management personnel. His column reflects his own views and not necessarily those of The Signal. “It’s The Law” appears Fridays and rotates between members of the Santa Clarita Valley Bar Association. Nothing contained herein shall be or is intended to be construed as providing legal advice.


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