Thriving underground economy targeted in statewide multi-agency outreach and enforcement effort
News: 2016 Press Release
SACRAMENTO, Calif. - 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.
"Businesses operating in the underground economy have an unfair and illegal competitive advantage that undermines legitimate businesses and comes at the expense of workers and consumers," said Insurance Commissioner Dave Jones.
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.
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.
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- For geographic-specific data see below-
- 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 Division of Labor Standards Enforcement; no workers' compensation insurance, Cal/OSHA issued eight workplace safety violations, two of which were serious, and one prohibit-use order for unsafe equipment.
- Bay Area, including Silicon Valley: Nine businesses 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.
- Fresno: Three businesses were visited, including 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: 12 businesses were visited, 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: Three construction businesses were visited; one had no violations and two had violations ranging from more than a dozen with workplace safety violations to illegal advertising.
- Photos and videos from the statewide outreach are available for viewing: https://www.flickr.com/photos/ca_dept_insurance/albums/72157667871789150 https://www.dropbox.com/sh/h84rtwixxg4euzk/AABQoClh_MojbdNeJ42hAi6Ya?dl=0
- State Agency Contacts for more information regarding specific violations
Contractors State License Board: 916-255-4161
Employment Development: 916-654-9029
Department of Industrial Relations: 510-286-7046
Department of Insurance: 916-599-1320
Franchise Tax Board: 916-845-7940
Board of Equalization: 916-327-8988
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $288 billion in premiums annually in California. In 2015 the California Department of Insurance received more than 155,000 calls from consumers and helped recover over $84 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.