Operation Underground Economy
The California Department of Insurance’s news release on its latest efforts to target the underground economy reminds me of some lines of Mission Impossible: “this is not mission difficult, Mr. Hunt. It’s mission impossible.” The California multi-agency team’s mission is to target a multi-billion dollar underground economy through statewide enforcement effort, which seems impossible. Yet, on May 9, 2016, a multi-agency team swooped down on businesses across the state to audit business practices and issue fines. Just take a look at the pictures of businesses hit during Operation Underground 2016, pictures that include visits to ongoing construction sites. This multi-agency team consisted of the Contractors State License Board, the Employment Development Department, Franchise Tax Board, Department of Industrial Relations and local district attorneys.
The business targeted included 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.
Violations consisted lack of licenses or workers’ compensation insurance resulting in immediate stop work orders, administrative citations and penalties for workplace safety violations, and audit referrals.
The following is a summary of the California Department of Insurance’s efforts as noted in its press release:
- 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.
For more information on the ongoing efforts targeting the underground economy, read here and here. Your mission, should you choose to accept it, involves complying with California’s laws. Because you are likely reading this, you care about staying above ground, and so the mission may be difficult but not impossible.
California Construction Law Blog | Nomos LLP 
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