Thriving underground economy targeted in statewide multi-agency outreach and enforcement effort

The California Department of Insurance yesterday, led a statewide enforcement outreach focused on providing information to businesses that may operate in California’s multi-billion dollar underground economy. The multi-agency team, which included the Contractors State License Board, the Employment Development Department, Franchise Tax Board, Department of Industrial Relations and local district attorneys visited 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.

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

Nine bay area businesses were visited, including home remodeling, charter bus and limousine services, and moving companies. Four companies had no violations. The five companies with violations ranged from a stop work order for no workers’ compensation insurance to penalties for contracting without a license.

“Businesses operating in the underground economy create an illegal competitive advantage that puts legitimate businesses at risk,” said Insurance Commissioner Dave Jones. “This multi-agency effort is focused on leveling the playing field, so legitimate businesses have a fighting chance in the marketplace.”

Enforcement teams visited a wide variety of businesses including 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 to verify contractors had valid licenses, workers’ compensation insurance and to check that workplace safety measures were followed.

Tree trimming and removal services caught the attention of the team, as residents look to remove trees killed by wildfire or bark beetles. The U.S. Department of Agriculture reported recently there are more than 40 million dead trees in California posing a significant fire danger. The team verified licenses and workers’ compensation insurance and made sure the companies complied with all labor and safety code requirements. 

In the Sacramento Valley four tree services companies and one landscaping company visited; three companies were found with violations and two had no violations. Violations found included a stop work order issued by the Department of Labor Standards Enforcement; no workers’ compensation insurance, eight workplace safety violations, two of which were serious, and one prohibit-use order for unsafe equipment.

Homeowners should make sure contractors they hire, including tree service companies, are properly licensed and have a valid workers’ compensation insurance policy. If a contractor does not have workers’ compensation insurance, the homeowner could be liable for any worker injuries that occur on their property.

Source: California Department of Insurance  |   2016 © Copyright Payroll Masters

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