With the economic downturn squeezing budgets worldwide, companies are consolidating and streamlining their operations to save money. Few places in the country have been hit as hard as California. One would think our legislators would be hard at work to establish an environment that attracts businesses and creates jobs. But Andrew Puzder, CEO of CKE Restaurants, which owns Carl’s Jr., tells a different story.

His company is considering moving its headquarters from Ventura County to Texas and to halt expansion in the Golden State. Three hundred new Carl’s Jr. restaurants are scheduled to be built in Texas, while none are planned in California. The reasons? Litigation and regulation.

The departure of CKE Restaurants should come as no surprise. California’s business climate has been rated time and time again as one of the worst in the nation. Our state’s rules and regulations make starting a business more of an exercise in bureaucratic paperwork than in entrepreneurship. The permitting process alone can take up to two years, while in Texas it can be done in as few as 1﻿1/2 months.

In California, restaurants are on the hook to comply with a slew of other regulations, such as parking regulations. This adds hundreds of thousands of dollars to the cost of opening a business. According to Puzder, it costs about $250,000 more to open a restaurant in California than in Texas. That was not a typo. It costs a quarter of a million dollars more to open a restaurant in California than Texas.

Even after businesses have gotten off the ground, California’s regulations continue to pigeonhole business owners in how they operate. For example, California ‘s strict work rules classify general managers as employees, requiring that they take breaks at specified times, harming their ability to manage the business effectively. Puzder said he has had to fire managers who insisted on working more hours than the state allows.

The reason managers would have to be fired for working hard is that it makes businesses vulnerable to litigation. With more than 1 million lawsuits filed every year, California is one of the most litigious states in the country, and its countless regulations make business owners a magnet for abusive lawsuits. No matter what type of business you are in, it seems like there is a lawsuit waiting for you.

If you own a restaurant and your bartender chooses to forgo a break to collect extra tips, you can be sued for wage-and-hour violations. If your trash can is moved by someone else in your store, you can be sued under the Americans with Disabilities Act. If you try to bring renewable energy to the desert, you can be sued by environmentalists and unions. Is it any wonder that many owners are deciding doing business in California is not worth it?

With businesses closing up shop due to rampant regulations and brazen lawsuit abuse, one would think legislators would be working to reform the regulations and close the legal loopholes. Unfortunately, hopes for change have been all but dashed.

Restaurant jobs alone represent 10 percent of the employment in California. Common-sense reforms are needed to allow them to thrive and strengthen the state’s economy.

As California struggles to emerge from the Great Recession, our leaders need to make it a place where Puzder and other CEOs want to do business. Hopefully, Puzder’s announcement opens legislators’ eyes to the damage caused by the state’s legal climate and regulatory burden.

DAVID HOUSTON is a restaurant owner and chair of California Citizens Against Lawsuit Abuse. JOT CONDIE is president and CEO of the California Restaurant Association. They wrote this for this newspaper.