Be Ready: Labor Enforcement Task Force Launched

The California Department of Industrial Relations (DIR) announced the launch of a new task force to “combat the underground economy.”

The Labor Enforcement Task Force (LETF) will be made up of personnel from the Department of Industrial Relations, the Employment Development Department, the Contractor’s State License Board, the Board of Equalization and the Bureau of Automotive Repair. 

The LETF was 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.

According to DIR, businesses that operate underground may violate many laws, including not paying income taxes, unemployment insurance or disability insurance; not carrying workers’ compensation coverage; not paying proper wages; and not registering for required licenses and permits.  

“These underground operations subsequently pay lower overhead costs which give them an unfair competitive advantage over legitimate, law-abiding businesses,” the DIR said in a statement.

The DIR said the LETF was created to

• Ensure workers receive proper payment of wages and are provided a safe work environment
• Ensure California receives all employment taxes, fees and penalties due from employers
• Eliminate unfair business competition by leveling the playing field

The LETF will also be working with the state Attorney General’s office, local district attorneys’ offices and the Department of Insurance on enforcement efforts.

The Department of Insurance said it will work with the LETF to focus on those employers who underreport payroll or misclassify employees to obtain a lower rate for workers’ compensation coverage, thus committing premium fraud.

Gail Cecchettini Whaley, CalChamber Employment Law Editor/Staff Counsel