By Editor,Tilly Armstrong

Copyright dailymail

Anti-business’, ‘extremely expensive’, ‘smothered in red tape’ – these are just some of the insults hurled at California by big business leaders in the last few weeks.

An increasing number of companies are fleeing the state for the likes of Florida, Texas and Tennessee, taking their revenue with them. And they are no longer going quietly.

Earlier this month, Bed Bath & Beyond sensationally announced it was leaving the state, sparking a very public war of words with Democratic governor Gavin Newsom.

Iconic California company Playboy also said it was moving to ‘pro-business’ Miami Beach, while several alcohol companies said they were leaving the state famous for its wine.

Meanwhile household names including Chevron, Charles Schwab, Elon Musk’s Tesla and SpaceX, Oracle and Hewlett Packard, have all fled California in the last several years, many of them pointing the finger of blame at Newsom’s progressive policies.

And now some business owners are beginning to fear the worst.

Tom Manzo, founder of the California Business and Industrial Alliance, says California is going to end up like Detroit in the 1970s and 1980s, tainted by a decline in the once-booming auto industry that led to a mass exodus of wealth and businesses.

‘Every other day businesses are closing. We’re getting kiosks to replace employees. People are not investing in California,’ he told the Daily Mail.

‘And we have a governor who is so arrogant and is not paying attention to what is happening. People are leaving and he is in denial.’

Critics say regulations, like increased minimum wages, have made it difficult to drive profits. But to Newsom and his allies, California’s booming GDP and long-standing dominance in industries like technology and entertainment prove it is still the most powerful engine for growth in the US.

For Manzo, the state’s stringent and complex labor laws are stifling businesses and paving the way for ‘frivolous’ lawsuits.

‘If you’re a large employer, or if you’re a small welding company, or if you’re a flower shop, or you’re a Dunkin’ Donuts franchise with seven employees, it doesn’t matter, everybody has to comply with a 1,100-page labor law digest,’ he said.

Manzo claims it is so convoluted that most business owners do not understand it and that even companies with strong HR legal teams are vulnerable to being slapped with a lawsuit for breaking a rule.

In particular, he pointed to the Private Attorneys General Act passed in 2004.

This act, known as PAGA, empowers aggrieved employees to file lawsuits to recover civil penalties on behalf of the State of California for labor code violations.

These violations can include missed meal breaks or unpaid wages.

Manzo himself faced a lawsuit in 2017 when he was running a small manufacturing company in California.

According to the California Department of Industrial Relations, plaintiffs filed more than 9,464 PAGA notices in 2024, which is the first step before a lawsuit can be filed.

Manzo argues the act makes it easy for employees to file expensive class action lawsuits, even if an employer simply makes a mistake.

‘I get that we need to protect employees, but it’s so far over the top,’ he said.

‘The only thing you’re doing is setting up employers to be sued by ambulance chasing trial lawyers that are going after businesses every day.’

And as big-name businesses pack up and leave the state, Manzo is growing more frustrated by Newsom’s response.

Earlier this month, Bed Bath & Beyond Executive Chairman Marcus Lemonis announced the company would not open any stores in California as part of its comeback from bankruptcy.

‘We want to be in markets where we can actually make a profit,’ he said.

‘And we don’t wake up every morning wondering if we’re going to be sued by some class action lawsuit or over-regulated by a local government.’

Lemonis also said he would ‘love to see Gavin Newsom out of office,’ saying his policies make the state unlivable for both companies and residents.

Newsom’s office then clapped back on social media, making fun of the company’s recent bankruptcy filing.

‘The company that already went bankrupt and closed every store across the country two years ago? Ok,’ Newsom wrote on X.

‘I talk to a lot of business owners and it’s just really offensive,’ said Manzo.

‘Everything we have to deal with, and we never get any help or support. They continue to pile on more laws, more regulations, and we have a governor who’s spending all of his time on social media.

‘The leader of our state is more focused on attacking Trump and sending out these bizarre tweets while everybody here is essentially drowning.’

In June, the second largest alcohol distributor in the US, Republic National Distributing, said it would no longer do business in California starting in September.

‘This decision is driven by rising operational costs, industry headwinds and supplier changes that made the market unsustainable,’ president and CEO Bob Hendrickson said at the time.

California has one of the highest state income taxes in the US. It also imposes high taxes on sales and property, which dramatically increase the cost of doing business.

While it is the larger companies which are drawing attention, Manzo claims smaller companies are also suffering.

But for them, they cannot afford to just simply leave the state.

According to a report this year from the Public Policy Institute of California, only 3 percent of firms in California have moved to a different state.

‘Let’s take for example someone who owns five McDonald’s franchises and employs a total of 100 people. That’s not a big business. That’s a small business,’ he said.

‘If they are told they are going to have to absorb 25 percent more costs on their payroll through wage hikes, they’re going to have to figure out how to do that.

‘Maybe they will raise prices or automate, or they’re going to decide it isn’t worth it anymore and close.

‘If they do end up opening new franchises, they’re going to open them up in different states.’

Manzo believes that meaningful labor law reform is the only way to keep businesses in the state, otherwise he thinks they will just keep leaving.

‘This criticism is misdirected,’ said Tara Gallegos, the deputy director of communications for the governor’s office. ‘California knows that when our workers do well, our businesses do well, too – and are proving it year after year. It’s how we’ve become the 4th largest economy in the world, and keep on growing.

‘With an economy as large and dynamic as California’s, you will always be able to find anecdotes, but the top-line numbers don’t lie.

‘Unfortunately, when Donald Trump isn’t on the golf course or posting insane late night Truth Social posts, he has turned a booming national economy into a stagnant one in record time. He knows this, which is why he fired the head of the Bureau of Labor Statistics.

‘Trump can try to hide the numbers but American families are feeling the impacts of his failure. His war on affordability and small businesses through his chaotic tariff schemes and his job- and economy-killing immigration raids are having real impacts.