Multi-Agency Team Conducts Statewide Outreach and Enforcement

On May 21, 2015 the California Department of Insurance led a statewide multi-agency outreach effort, visiting more than 75 businesses to educate business owners about their obligations to comply with insurance, licensing, workplace safety, labor laws and tax codes. The statewide effort focused on curbing California’s multi-billion dollar underground economy.

Safety, licensing and insurance violations lead to stop work orders and nearly $300,000 in fines

Safety, licensing and insurance violations were found at approximately one-third of the businesses visited. Some businesses were issued immediate stop work orders and others were issued administrative citations. At one residential construction location in Los Angeles the contractor was unlicensed and had no insurance, which put the homeowner at significant financial risk.

 “Homeowners may not realize they are financially vulnerable if a contractor or vendor they hire does not have workers’ compensation insurance,” said Insurance Commissioner Dave Jones. “Homeowners should always check to make sure anyone they hire has a valid workers’ compensation insurance policy.”

The statewide effort resulted in more than 15 citations, multiple stop work orders and nearly $300,000 in fines. The Contractors State License Board and the Labor Commissioner’s Office issued 19 stop work orders for having workers on the job site with no workers’ compensation insurance. Cal/OSHA issued six orders to stop work where hazards could have injured employees.  The Employment Development Department plans to initiate 31 audits, based on information from the businesses visited.

Enforcement teams from five state agencies including the Department of Industrial Relations, Contractors State License Board, Department of Insurance, Franchise Tax Board, and the Employment Development Department and several district attorney investigators visited a variety of businesses, including restaurants, car washes, supermarkets, and a number of residential construction sites to verify contractors had valid licenses, workers’ compensation insurance and to check that workplace safety measures were followed.

 “Consumers and legitimate business people are hurt by this type of underground activity,” said CSLB Registrar Cindi Christenson. “Homeowners who hire unlicensed workers can be ripped off, have their property damaged or be liable if a worker is injured. It also hurts the legitimate licensed contractors who follow the law and do things right.”

While each participating agency conducts its own enforcement and compliance investigations and audits throughout the year, regulators often collaborate in multi-agency outreach and compliance efforts to educate business owners and have an impact on the state’s illegal underground economy, which according to a UCLA labor study estimate cost California between $60 and $140 billion annually and creates an unfair and illegal competitive advantage.

Agencies participating in the operation took a number of actions to address violations including issuing immediate stop work orders, issuing citations and fines. In some cases the administrative action could lead to criminal charges being filed by the district attorney. For detail regarding administrative actions and dispositions of cases, please contact the appropriate regulator.

Source: Department of Insurance

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