California agencies target ‘underground economy’

construction workersFrom the Contra Costa Times — California is attacking the underground economy — businesses who pay wages in cash and avoid withholding payroll taxes or paying for workers’ compensation insurance.

“[E]arly this year Department of Industrial Relations director Christine Baker told the Little Hoover Commission that the state loses from $800 million and $1.2 billion each year from employers paying workers in cash, failing to pay into the workers’ compensation fund or wrongly classifying employees as independent contractors and not paying for their benefits.

The state’s roofing industry is under particular scrutiny after 367 falls were reported in three years, resulting in $70 million in compensation and medical costs. Following tips, the task force cited more than 60 violations in less than a year.

The Labor Enforcement Task Force involves nine agencies, with the goal to be more efficient and more effective.

Participants include the Division of Occupational Safety and Health, Employment Development Department, Contractors State License Board, Bureau of Automotive Repair, Agricultural Relations Board, Department of Insurance, Labor & Workforce Development Agency and the Attorney General and district attorneys throughout the state.

The joint effort gives inspectors more enforcement tools. Last year, 40 percent of the joint inspections resulted in violations by every participating agency.

In fiscal 2013-14, inspections focused on the most densely populated counties and industries where the underground economy is most prevalent: Construction, agriculture, automotive repair and restaurants.

Of nearly 1,400 businesses inspected, 45 percent were construction businesses, with 81 percent found out of compliance.

The most violations — more than 350 cases — were in construction, for lack of license and no workers’ compensation.

Going without workers’ compensation coverage is risky, said DIR spokesman Peter Melton, noting this insurance protects employers from lawsuits resulting from work-related injuries….”

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