California agencies crack down on regulatory compliance violators

Business laws are designed to ensure a marketplace that promotes efficiency, fairness and competition. On the other hand, there are some companies in California that attempt to skirt certain business and employment laws in order to gain an unfair edge over competition. One common type of regulatory compliance violation committed by companies is not adhering to employment laws.

Part of the reason that some business owners decide to take this route is to avoid having to pay for workers' compensation insurance as well as taxes related to having employees on the books. Employers do this by paying workers cash or inaccurately classifying workers as independent contractors rather than employees. This allows employers to avoid having to pay for worker benefits that they may normally be required to do. The state government loses approximately $800 million to $1.2 billion annually as a result of employers paying workers cash in this "underground economy," according to estimates by the state Department of Industrial Relations.

The California Department of Industrial Relations has been given the task of operating a newly formed task force aimed at cracking down on this underground economy. California's roofing industry has been given extra scrutiny. Apparently 367 falls have been reported within three years, which has cost the state $70 million in medical costs and compensation. The task force has cited over 60 violations as a result of tips received over the course of less than a year.

However, no matter what industry a business operates within, the business should ensure that it is adhering to regulatory compliance in California. State agencies are not only looking at the roofing industry, they are also actively taking steps to crack down on violators in all industries. Therefore, it would be in the best interests of a company to comply to rules and regulations in order to avoid future penalties.

Source:, "California agencies target 'underground economy'", Jondi Gumz, Dec. 26, 2014

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