Thursday, December 1, 2022

Statewide Enforcement Effort Targets Underground Economy

A multi-agency team led by the California Department of Insurance reached out last week to businesses that may operate in the underground economy.

The enforcement effort included visits to dozens of locations across the state to educate business owners of their obligations to comply with insurance, licensing, workplace safety, labor laws and tax codes.

Characteristics

Businesses that operate in an “underground economy” may engage in such activities as hiring employees off the books and paying them under the table; not withholding and remitting state disability insurance contributions; failing to protect workers as required by workplace health and safety regulations; and not carrying the proper licenses or adequate workers’ compensation insurance coverage.

Enforcement teams visited a wide variety of businesses: security firms, restaurants, environmental waste companies, personnel services, home design, roofing, tree services, limousines and charter bus companies, moving companies, retail stores and construction sites.

The teams verified that contractors had valid licenses and workers’ compensation insurance and checked that workplace safety measures were followed.

Safety, licensing and insurance violations were found at approximately 20 of the businesses visited. Those not carrying required licenses or workers’ compensation insurance were issued immediate stop work orders. Other businesses received administrative citations and penalties for workplace safety violations, and some received audit referrals.

The multi-agency team included the Department of Insurance, the Contractors State License Board, the Employment Development Department, Franchise Tax Board, Department of Industrial Relations and local district attorneys.

Results by Area

A news release from the Department of Insurance provided the following information on the scope of the effort:

Sacramento Valley: Visits to four tree services companies and one landscaping company. Three companies had violations and two had no violations. Violations found included a stop work order issued by the Division of Labor Standards Enforcement; no workers’ compensation insurance; and Cal/OSHA issued eight workplace safety violations, two of which were serious, and one prohibit-use order for unsafe equipment.

Bay Area/Silicon Valley: Visits to nine businesses, including home remodeling, charter bus and limousine services and moving companies. Four companies had no violations. Five companies had violations ranging from a stop work order for no workers’ compensation insurance to penalties for contracting without a license.

Fresno: Visits to three businesses: an ambulance company and two tire stores. More than a dozen workplace safety violations were found at the three businesses, and one was issued a stop work order for no workers’ compensation insurance.

Los Angeles and Inland Empire: Visits to 12 businesses, including restaurants, a vape shop, hotels, a nursery, builders and auto services. Violations ranged from no workers’ compensation insurance to workplace safety violations.

San Diego: Visits to three construction businesses. One had no violations and two had violations ranging from more than a dozen workplace safety violations to illegal advertising.

Staff Contact: Gail Cecchettini Whaley

Related Articles

Garment Industry Job Killer Moves Forward in Assembly

A California Chamber of Commerce-opposed job killer bill that increases costs and liability for nonunionized employers in the California garment manufacturing industry passed the Assembly Judiciary Committee this week. SB 62 (Durazo; D-Los Angeles) places...