Coalition Continues to Convene Leaders in the Fight Against the Underground Economy

SACRAMENTO, Calif., Dec. 12, 2011 /PRNewswire/ -- A coalition of frustrated employers, businesses, associations and labor representatives came together in late November to hear from a panel of agency chiefs on efforts to chip away at the underground construction economy. The coalition's goal is to provide public protection and level the playing field for compliant construction contractors. Facilitated by the California Professional Association of Specialty Contractors (CALPASC), 80 individuals, including principals from construction companies, representatives from labor organizations and agency personnel, attended the meeting to learn of updates and interact with agency chiefs.  Panel members included Orange County District Attorney Tony Rackauckas; California Labor Commissioner Julie Su; Chief of Enforcement David Fogt for the Contractor State License Board (CSLB); and the Employment Development Department's (EDD) Chief of Underground Economy Operations Simon Ramsubhag.

Before listening to attendees' concerns about time wasted on contractors who were primarily compliant, panel members described their agencies' current and prospective efforts. "We are pleased the agency chiefs listened and acknowledged our concerns," said CALPASC Executive Director Brad Diede. "And we need to continue to see strides made in this fight.  Too many violators continue to do harm by escaping the law." Diede noted further, "As another signal of support, we are delighted to see the Governor's permanent appointment of Christine Baker as the Director of the Department of Industrial Relations."

During the panel discussion, Labor Commissioner Su, who reports directly to Baker, communicated her intent to "hold staff accountable on targeting flagrant cash-pay violators" and offered a "top 10 list" of areas on which she will focus, including:

1. Better state coordination and information sharing between agencies with improved technology to achieve better intelligence and identify violations.
2. Education of investigators to better understand the industries they are investigating.
3. Better pre-inspection surveillance or more in-depth investigation through accurate information from the start.
4. Focusing on getting owed wages paid to employees who have been shorted.
5. More effective worker interviews.
6. More off-hour inspections.
7. Better protection against retaliation, and if there is retaliation, addressing it by having employees call inspecting officers who are familiar with the issue instead of a whistleblower responding officer who may not be familiar with the issue.
8. Bringing more peace officers to the department and looking at criminal violations as well as partnering more with district attorneys.
9. More effective referrals between agencies.
10. Using all the weapons at hand, including strong litigation to go after bad actors and cite Labor Code 2810 violations.

"Both Baker and Su take our cause for enforcement in construction very seriously, and these stated steps tackle a number of the bureaucratic problems that create obstacles to efficient enforcement," said Diede.

Both CSLB Chief Fogt and EDD Chief Ramsubhag spoke to the magnitude of the problem with the underground economy.  Fogt referred to concerns around the "semi-underground" licensed contractors and the value of Senate Bill 1254, which allows the agency to stop a job if workers' compensation is not in force. Fogt described a review of 300,000 licensed contractors that showed 60 percent of the contractors filed exemptions from workers' compensation insurance and mentioned that there is a pilot program underway with the State Compensation Insurance Fund to help identify fraud.

"Unfortunately, under reporting the actual payroll to workers' compensation carriers and other violations are too common," said another coalition partner, Darlene Besst with the National Electrical Contractors Association (NECA). "The only way these perpetrators will be caught is through coordination among the state agencies, which is why this coalition came about and why the coalition is planning more sessions with state agency chiefs."

Diede agreed, saying, "Although we appreciate that some progress is being made on enforcement, we need to move faster, otherwise legitimate trade contractors will go out of business."

Ramsubhag described his department's work with the Labor Enforcement Task Force and specifically expressed interest in generating qualified leads to track down violators.  Construction company owners and labor representatives were encouraged when Ramsubhag indicated 70 percent of his department resources will be dedicated to the construction industry in 2012, mainly focusing on HVAC, roofing and landscaping.

In addition to building the coalition, CALPASC initiated the LEVEL Program in 2010 to work closely with state agencies in cracking down on cheating contractors.

On December 5, CALPASC and coalition members continued their discussions with state leaders by attending the hearing on small business and the underground economy held by Senator Mark DeSaulnier at the State Capitol. The hearing focused on the economic impacts created by the underground economy, ways to combat it and the loss it creates to the state and small business.

The California Professional Association of Specialty Contractors is a nonprofit 501(c)6 trade association advocating on behalf of trade contractors and suppliers of building materials in California. CALPASC is committed to educating members on complex issues and advancing safety and compliance within the building industry.

SOURCE California Professional Association of Specialty Contractors