State enforcement efforts ramped up against California businesses that deliberately operate in the “underground economy” by not complying with state contracting, insurance and payroll requirements.
Dave Jones, California’s Insurance Commissioner, said that “Operation Underground,” a series of sweeps at construction sites suspected of illegal operations, resulted in 104 enforcement actions.
Investigators issued enforcement actions for violations including:
- Failure to carry workers’ compensation insurance
- Under-reporting the number of workers to obtain cheaper insurance premiums and to pay less payroll withholding tax
- Cash payment to hide unregulated practices
The Joint Enforcement Strike Force (JESF) led the series of sweeps in June. Detectives from the California Department of Insurance, the Contractors State License Board, the Employment Development Department and county District Attorneys’ offices partnered for the sweeps.
The sweeps were conducted in 11 counties: Alameda, Butte, El Dorado, Kern, Los Angeles, Monterey, Orange, Riverside, San Bernardino, Santa Clara and Yolo.
“Legitimate businesses that play by the rules are often forced to close their doors because illegal businesses are cheating the system,” Insurance Commissioner Jones said in a statement.
In addition, HR Informant previously blogged about a new multi-agency task force created to crack down on businesses that do not follow the state’s labor laws — hiring employees off the books and paying them under the table.
The Labor Enforcement Task Force focuses on industries that traditionally employ low wage workers, and is made up of personnel from the Department of Industrial Relations, the Employment Development Department, the Contractors State License Board, the Board of Equalization and the Bureau of Automotive Repair.
Author: Gail Cecchettini Whaley
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