What would a level playing field look like for contractors? How do partnerships help the State clamp down on unlicensed contractors and illegal activities? What is the CSLB doing to help legitimate contractors during this severe economic downturn? These were among the issues addressed on June 18th at the Holiday Inn Capitol Plaza in Sacramento.
When I first received my invitation to the CSLB sponsored Underground Economy Conference, I thought, “what a great idea!” I was pleasantly surprised to find about 150 people waiting to hear a variety of leading experts discuss how to combat those contractors who don’t carry Worker’s Compensation insurance; fail to pay proper payroll taxes and avoid securing proper building permits.
Cindy Mitchell, the new CSLB Chair and herself a licensed specialty contractor of 20 years was the first speaker. In her prepared remarks, she set the tone for the remainder of the Conference by pointing out that “as the economy goes downhill, more and more contractors are making bad decisions.” She went on to say that the problem is not just unlicensed contractors but also employees being paid in cash, employers claiming fewer workers than are actually on payroll, and failure of some businesses to pay unemployment insurance. David Fogt, Chief of Enforcement for the CSLB, followed Ms Mitchell to the lectern. Mr. Fogt, a licensed contractor since 1986, discussed the role of Building Departments in identifying unlicensed contractors and clamping down on improper “owner builders”.
The theme for many of the remaining speakers was how state and local government agencies are working closely together on Joint Enforcement Efforts. Pete Guisasola, Chief Building Official in the City of Rocklin, talked about his work with the CSLB to identify unlicensed contractors. He “wants a level playing field and is tired of seeing shoddy work and people who are being cheated” by those not playing by the rules.
Another expert, Lt. Dan Stroski, with the Yolo County District Attorney’s Office pointed out that in his many years of law enforcement, “fraudsters rarely commit fraud in (only) one area of their lives”. With a picture of Bernie Madoff in the background, Lt. Stroski discussed how his agency not only works closely with the CSLB and Dept. of Industrial Relations, but also a multitude of tax and revenue agencies including the EDD, IRS, FTB and Board of Equalization. He firmly believes that through these joint efforts and the Yolo Unlicensed Rapid Apprehension Team (YoURAT), many unlicensed contractors avoid Yolo County because of its “aggressive enforcement”.
This was an informational conference where some questions were left unanswered. Speaker after speaker assured the audience; of contractors, association representatives, public employees and others that they were doing their best with limited resources to put a dent in the underground economy. When one speaker asked, “how many public agency representatives are NOT experiencing cutbacks?” No one raised a hand. From the State on down, those fighting illegal contracting activities are being asked to do more with less staff. Also, as I discussed with one speaker, unlicensed contractors are only one of the targets for agencies that are required to pursue criminal activity in other professions.
At the end of the day, what I came away with was:
- Some local governments do an excellent job partnering with state agencies;
- Cooperation among State enforcement agencies does work to combat illegal and unlicensed activities;
- Much more needs to done by local and state governments to eliminate what Mark Lopez, a criminal investigator with the Tulare County Districts Attorney’s office, summarized as “Unfair Business Practices”; and
- Those working to put a dent in the Underground economy rely on us – those playing by the rules – to help fight those gaining an unfair economic advantage through illegal activities.