FOR IMMEDIATE RELEASE
June 27, 2024
Media Contact: Sumeet Bal, Public Advocates Director of Communications, sbal@publicadvocates.org
Californians Want More Transparency in Fifth Largest Global Economy
Opaque LLC Structures Allow Bad Actors to Evade CA Laws With Impunity
Sacramento, Calif.—Senator María Elena Durazo, and co-sponsors Public Advocates and Rise Economy, announced that Senate Bill 1201, the LLC Owner Transparency Act, will not advance further this year to ensure its faithful passage and strong implementation. The bill would allow every Californian to know who owns and operates businesses in their neighborhoods and cities. In recent months, state leaders have made efforts to control government spending through a newly passed state budget, addressing the affordable housing and homelessness crisis, supporting workers struggling with the rise of skyrocketing daily costs, and ensuring that we are strengthening the pillars of democracy through transparency and accountability; SB 1201, offered a critical, straightforward solution.
“In California, we lead with some of the nation’s strongest worker, tenant, and environmental protections. At a time of growing inequality and unchecked corporate greed, achieving transparency and restoring integrity in our laws should be a top priority,” said Senator María Elena Durazo (D-26), the bill’s author. “I am grateful to my colleagues in the Senate for supporting this good governance bill that cuts across our housing crisis, wage theft, climate injustice, and health and safety issues to support workers, families, and seniors. During tight budget years, as leaders, we must do everything in our power to support working-class communities and to ensure taxpayer dollars—locally and statewide—are being used efficiently. We do not have space for those who want to act with impunity, making a mockery of our laws in the fifth largest global economy and I will not stop pushing for this critical legislation until all businesses in our state operate with full transparency.”
As the fifth largest global economy, California needs to create policies that require greater transparency for businesses operating in our state. Currently, businesses in California do not have to identify the owners behind a Limited Liability Corporation (LLC) when they register and record their information with the Secretary of State’s office. This opacity has created a loophole for bad actors to exploit, hurting our neighbors through wage theft, evictions and decay in rental housing, abandoning toxic pollutants for taxpayer clean-up, and much more. It has also undermined efforts by government enforcement agencies to catch bad actors who hide behind webs of LLCs, causing years-long delays as investigators work hard to unearth patterns —all at a cost to taxpayers across the state.
“The California Secretary of State’s office must accept its role in rectifying the harm created by the opacity in its process. This legislation provides a common-sense remedy by simply bifurcating an existing question on an existing form to mandate disclosure of the owner name— something most businesses are already doing,” said Jyotswaroop Bawa, Chief of Campaigns at Rise Economy. “Owner transparency will restore integrity in California’s real estate, business, and employment landscape. It will support law-abiding businesses to thrive in our economy. And years with a budget deficit, this bill will empower the state’s enforcement agencies to do their job to protect Californians as our laws intend. Without transparency, we allow corporations to make a mockery of our justice system and leave hard-working families vulnerable to bad actors.”
The data and hundreds of stories across the state demonstrate the urgent need for transparency. According to a Rutgers University report, an estimated $2-$5 billion in earned wages are stolen through violations across San Diego, Long Beach, Los Angeles, and the Bay Area– all happening when many working-class communities across our state are struggling to afford everyday, basic necessities. Even when workers receive a judgment in their favor, many cannot collect because the true employer owners cannot be held responsible. Similarly, code enforcement officers who address life-threatening health and safety violations, including extreme disrepair and health toxins in homes, are working around the clock to identify the true landlord owners responsible. Children are suffering from permanent brain damage due to lead paint poisoning while owners hide behind layers of opaque LLCs to avoid addressing the housing violations. City Attorneys have even said that they could reduce the years spent identifying bad actors to one afternoon if the Secretary of State’s Office could add one line identifying the true owners to their existing business filing form.
“As a civil rights law firm and advocacy organization, we are eager to advance transparency, justice, and accountability for all Californians. One way to do this is through good governance policies that empower our community members, neighbors, and workers to address unscrupulous and illegal activity, and to understand who owns our land and housing,” said Public Advocates’ Senior Staff Attorney Suzanne Dershowitz. “Until we can shine a light on who is doing business in California, bad actors will continue to operate with impunity. Make no mistake, this fight is not over until every Californian can understand who owns businesses in their neighborhoods and communities.”
###
Public Advocates Inc. is a nonprofit law firm and advocacy organization that challenges the systemic causes of poverty and racial discrimination by strengthening community voices in public policy and achieving tangible legal victories advancing education, housing, transportation equity, and climate justice.
Rise Economy, formerly the California Reinvestment Coalition (CRC), is a member-led alliance focused on creating a more equitable society where Black, Indigenous, and People of Color have access to resources and opportunities to build generational wealth. As the largest statewide community reinvestment alliance in the country, Rise Economy advocates for policies and practices that promote racial and economic justice and that address the root causes of inequality.
