When government doesn’t get in the way, small businesses are vibrant engines fueling the American economy. They create good-paying jobs, invest in local communities, and provide innovative products and services that improve our lives. In Maryland, there are more than 600,000 small businesses employing nearly half of the state’s workforce.
As the owner of Diva by Cindy Hair Care, I am proud of our line of all-natural hair products, many of which help women experiencing hair loss. Whether it’s cancer patients undergoing chemotherapy or individuals shedding hair due to thyroid disorders, our products have enriched the hair and lives of our loyal customers. As a minority and female entrepreneur, I am grateful to be living my version of the American dream here in Baltimore County.
However, a poorly formulated rule from outside the Old Line State threatens to destabilize my business.
Passed by ballot initiative in 1986, Proposition 65 requires businesses selling to consumers in California to add warning labels on products that contain certain chemicals. Most notably, the measure impacts products with a 0.001% chance of causing cancer over a 70-year period — or a 1 in 100,000 risk. By comparison, one has a significantly higher chance of being struck by lightning in one’s lifetime.
Such a small threshold impacts a wide range of products, from flip-flops to body lotion. Moreover, some chemicals listed under Prop 65 have never been proved to cause health problems under typical circumstances. No one is chewing on a flip-flop or inhaling Styrofoam. Additionally, a whole host of products that “violate” Prop 65 contain health benefits that far outweigh any perceived risk of chemical exposure. For instance, coffee — impacted by Prop 65 for the chemical acrylamide — contains substances that have been linked to a lower risk of cancer.
For nearly 40 years, Prop 65′s broad language has opened the door to legal nightmares for small businesses like mine, keeping trial lawyers busy and well-paid. Bounty hunter attorneys have relentlessly pursued businesses with improper labeling. Some have even taken products home to test for prohibited chemicals to help keep the financial boondoggle going.
As a result, businesses have paid around $370 million since 2000 in settlements for alleged violations, choosing not to bankrupt themselves further with attorney fees. Worse yet, some businesses are at risk of closing shop altogether due to Prop 65′s legal dramas.
How exactly does the California policy implicate Diva by Cindy Hair Care? A third-party business ended up selling one of our products in California. Fast-forward to today, and now my business is victim of a lawsuit claiming that our products contain trace amounts of chemicals breaching Prop 65.
What is the potential price tag if the frivolous lawsuit succeeds? A whopping $50,000. While bigger businesses can treat this cost as a mere financial nuisance, smaller ones like mine operate under extremely tight profit margins. While my business may be exempt from Prop 65 for the number of employees we have, other small businesses may not be as fortunate.
Having been in business for nearly two decades, I have witnessed many unreasonable policies that harm the small business community. But Prop 65 is in a league of its own. It is an ill-conceived regulation crafted thousands of miles away that robs precious time and resources from businesses whose products enhance the lives of customers.
The small-business community is under assault from high taxes and a growing mountain of government red tape. Reckless lawsuits stemming from poorly crafted out-of-state laws that extend across the country are yet another threat. Policymakers should prioritize common-sense tort reform to address it.
Cindy Tawiah (firstname.lastname@example.org) is a small-business owner in Maryland and a partner of the Job Creators Network Foundation.