California business groups have sued to stop the state from implementing a new law that prohibits companies from ordering workers to attend meetings on unionization and other matters.

The law, Senate Bill 399, went into effect Jan. 1 and makes it illegal to penalize an employee who refuses to attend a meeting at which their employer discusses its “opinion about religious or political matters,” including whether to join a union.

Unions have long held that these so-called “captive audience meetings” serve to intimidate employees and hinder organizing efforts. The legislation, authored by State Sen. Aisha Wahab (D-Hayward), is among a set of new workplace laws going into effect in California in 2025.

In a federal lawsuit filed on New Year’s Eve in the Eastern District of California, the California Chamber of Commerce and the California Restaurant Assn. contend that the law violates companies’ rights to free speech and equal protection under the 1st and 14th amendments.

The law violates these protections by “discriminating against employers’ viewpoints on political matters, regulating the content of employers’ communications with their employees, and by chilling and prohibiting employer speech,” the lawsuit said. Employers “have the right to communicate with their employees about the employers’ viewpoints on politics, unionization, and other labor issues.”

The suit asks the courts to block the law from going into effect.

“Throughout legislative deliberations, we repeatedly underscored the fact that SB 399 was a huge overreach,” chamber President Jennifer Barrera said in an emailed statement. “SB 399 is clearly viewpoint-based discrimination, which runs afoul of the First Amendment.”

Jot Condie, president of the California Restaurant Assn., said the law “creates restrictions that are unworkable.”

The lawsuit was no surprise, said Lorena Gonzalez, a former state assembly member and current head of the California Labor Federation. She said business groups had threatened to bring a legal challenge during the legislative process, and in response the American Federation of Labor and the Congress of Industrial Organizations had prepared a legal memorandum arguing that the law limits employer conduct, not speech.

She said employers typically hold captive audience meetings after workers have signed union cards indicating their support for a union, and are “one of the most coercive tools employers use to scare workers out of their right to unionize.”

“This isn’t a free speech issue. An employer can still talk crap about unions — they can talk about politics and about religion. They just can’t retaliate against workers who don’t want to sit through their opinions,” Gonzalez said. “Workers also have a 1st Amendment right as well, to be free of being held captive and forced to listen to things that have nothing to do with the actual work.”

California joins at least 10 other states including Alaska, Hawaii, New Jersey, New York, Oregon, Vermont, and Washington that have implemented similar bans. Business groups successfully challenged a Wisconsin law in 2010 but similar challenges to Oregon’s law have been dismissed.

A November ruling by the National Labor Relations Board also banned mandatory captive audience meetings. The 3-1 decision reversed the board’s decades-old standard in place since 1948 that allowed for these mandatory meetings.

“Ensuring that workers can make a truly free choice about whether they want union representation is one of the fundamental goals of the National Labor Relations Act,” Democratic chair of the board, Lauren McFerran, said in a statement about the decision.

The ruling stemmed from a complaint over Amazon’s conduct ahead of a 2022 union election at a Staten Island facility, where it held a series of mandatory anti-union meetings. Amazon has said it plans to appeal the decision.

Both the vehicles used in two New Year’s Day attacks in New Orleans and Las Vegas were rented through Turo, a car-sharing app.

The attacks thrust the San Francisco company that created the app, which relies on a model similar to Airbnb to enable users to rent cars directly from their owners, into the spotlight and raised questions about the ability of such peer-to-peer services to adequately vet users for possible safety issues.

In a statement, the company defended itself, saying it’s committed to the “highest standards in risk management.”

“We do not believe that either renter involved in the Las Vegas and New Orleans attacks had a criminal background that would have identified them as a security threat,” Turo said in a statement Wednesday. “We are actively partnering with law enforcement authorities as they investigate both incidents.”

In the first incident early Wednesday morning, 42-year-old Shamsud-Din Jabbar plowed a Ford pickup truck he rented on Turo into a crowd on Bourbon Street in New Orleans, killing at least 14 and injuring many others before being killed by police. Later that day, a man authorities believe to be 37-year-old Matthew Livelsberger parked a Tesla Cybertruck he had rented days earlier in Denver in front of the Trump International Hotel in Las Vegas. Seconds later, fuel canisters and fireworks packed into the truck’s bed exploded, slightly wounding seven bystanders. The driver’s badly burned body was later found with a gunshot wound, leading authorities to conclude Livelsberger shot himself.

Founded in 2009 by former Chief Executive Shelby Clark, privately held Turo operates in more than 16,000 cities and serves 3.5 million active guests. The app offers more than 1,600 makes and models of vehicles and has helped vehicle owners earn $4.8 billion since its inception, a company filing said.

The app works by connecting renters to car owners seeking to share their vehicle for a profit. Users can search for cars by location and communicate directly with owners to arrange a pickup. Owners set their daily rates, and there’s a $15 minimum requirement for each trip.

According to the company’s website, a user must have a valid driver’s license, home address and payment card to rent a vehicle. Turo may also check a potential renter’s credit report and criminal background, the website says.

The company said it was “heartbroken by the violence perpetrated” and employs “world-class” trust and safety protocols, including hiring former law enforcement professionals.

Turo claims to be the world’s largest car-sharing marketplace and offers an alternative to traditional rental companies such as Hertz and Enterprise. Founded as a venture-capital-backed startup, the company first filed paperwork to make an initial public offering in 2022 but has yet to go public.

Turo saw a $14.7-million profit in 2023 and $19 million over the first nine months of 2024, according to a filing. It faces some competition in the car-sharing space, including from the rental app Getaround, which uses a similar platform to connect owners and renters.

This is not the first time Turo vehicles have been associated with criminal activity. In 2021, a Houston woman was charged with committing a series of robberies, which she allegedly carried out using seven cars rented through Turo. Rentals from Turo and Getaround have also been stolen and involved in drug trafficking, according to NBC News.

Police have identified suspects in both New Year’s Day attacks. After investigating a possible connection between the incidents, authorities said they believe the two men involved in the incidents each acted alone. The Cybertruck explosion was not due to a faulty vehicle, Tesla Chief Executive Elon Musk said.

The owner of the pickup used in the New Orleans attack told the New York Times that he recognized his vehicle on the news. He had been renting out five vehicles on Turo as a second income stream but will not use the platform after the attacks, he said.

Donald Trump’s election with Republican House and Senate majorities has put the Internal Revenue Service back in the spotlight. The agency lost $20 billion in funding under the latest deal to avoid a government shutdown, and further cuts to its enforcement budget are likely in the next Congress.

Democrats denounce such moves as harmful to federal revenues and tax fairness; Republicans cheer them for limiting government. Unfortunately, neither side tends to point out that an adequately funded IRS is good for the U.S. economy.

Years of IRS underfunding have led to a massive unpaid tax bill, around half a trillion dollars a year. Beyond lowering revenues, the sheer magnitude of this tax evasion has implications across the economy, providing competitive advantages to those able and willing to avoid their tax obligations. Less enforcement funding will only worsen this problem.

The hundreds of billions of dollars in taxes that haven’t been paid are not spread evenly across taxpayers. They’re disproportionately owed by businesses with the greatest incentive and ability to shirk their tax burdens. These include self-employed entrepreneurs, businesses that deal in cash and large, private companies with complex operations. Companies that have less opportunities to evade taxes, and workers who are paid directly by an employer, are more likely to pay their taxes.

The unpaid taxes therefore work as a substantial subsidy for the businesses and taxpayers who evade them. In economic terms, lower taxes boost returns on investment for the businesses that avoid their obligations but not for others. That in turn distorts the way businesses operate in three primary ways.

First, the tax gap pushes more economic activity toward industries and occupations with opaque sources of income — such as construction businesses that deal mainly in cash. Our economy needs contractors, of course, but we don’t want an inordinate number of capable workers rushing into remodeling for cash simply because it offers an illegal tax break. Similarly, we don’t want people choosing self-employment simply because it gives them better chances of dodging the IRS. Labor and capital markets work best when they’re driven by business considerations rather than tax evasion.

Second, tax-cheating businesses gain an advantage on each dollar of profit. A company that doesn’t pay taxes can take on investments that wouldn’t make financial sense if it were meeting its tax obligations. This means the scofflaw company can profitably expand while the complying company cannot, putting honest taxpayers at a competitive disadvantage.

Third, a portion of the economy is dedicated to the evasion itself. Skirting a tax bill can be a lot of work: It takes time and money to set up shell companies, safely store large amounts of cash and falsify documents. Rather than going to some productive use, this activity amounts to what economists consider a “deadweight loss” that does not help our economy expand in any way. Avoiding half a trillion dollars in taxes requires a lot of work and resources that serve no purpose other than to illegally lower tax bills.

The end result of widespread tax evasion is an economy that is far less efficient than it could be. Too many employees in cash-based industries, too many accountants setting up shell corporations and other distortions ultimately discourage investment by taxpaying businesses and suppress economic growth.

Providing the IRS with enough funds to enforce our nation’s tax code isn’t just about fairness and revenue. It’s also vital to the efficiency and productivity of our economy.

Ben Harris is the vice president and director of economic studies at the Brookings Institution and a former assistant Treasury secretary for economic policy.