Unlicensed Enforcement, LLC’s Licensed & Work Comp exemptions

We have been busy at Capitol Services helping contractors discover new opportunity in Nevada and Arizona, a ‘rush’ that is reflected in recent news of their leading the nation in state population growth over the last decade. Meanwhile, licensed contractors may find greater opportunity within the borders of California as government focuses on creating a ‘level’ playing field by cracking down on the unlicensed operators ‘bending’ the rules…


The CSLB Enforcement Committee met in Sacramento last week to discuss a wide variety of topics related to contractors and the construction industry.  Of particular note was their emphasis on increasing proactive enforcement aimed at the underground economy.


The Contractors Board will be stepping up partnering with other state agencies including the Employment Development Department (EDD) and Department of Industrial Relations (DIR), among others.  The focal point will be the newly created DIR Labor Enforcement Task Force (LETF), which was launched on January 1st.  According to the DIR, “this is a collaborative effort between state agencies to combat the underground economy and to improve California’s business environment where legitimate employers can thrive.”


The primary partners of the LETF include DIR, the Employment Development Department, Contractor’s State License Board, Board of Equalization, and the Bureau of Automotive Repair.  “The goal of LETF is to ensure fair and safe working conditions in all workplaces and promote a level playing field for employers through education and enforcement of state laws,” said Labor and Workforce Agency Secretary Marty Morgenstern. “Labor law violators endanger workers and have an unfair market advantage over law-abiding businesses”. The goals of the task force will be to:

1) Ensure workers receive proper payment of wages and are provided a safe work environment; 2) Ensure California receives all employment taxes, fees, and fines due from employers; 3) Make efficient use of state and federal resources in carrying out the mission of the Labor Enforcement Task Force; and 4) Eliminate unfair business competition by ‘leveling the playing field’ so that employers who comply with the law do not have to compete with employers who break the law.  According to DIR Director, Christine Baker, “By joining forces with other agencies conducting inspections, we can have a greater impact on stopping labor violations and the underground economy.  Collaboration will also save time and money by avoiding overlapping inspections and focusing our efforts on the egregious violators.”


According to the DIR, and echoed by the CSLB, businesses operating underground typically violate many laws designed to protect workers and our state’s economy. These include: not paying income taxes, unemployment insurance or disability insurance; not carrying (or under-reporting) Workers Compensation coverage; not paying proper wages; and not registering for required licenses or permits. These underground operators subsequently pay lower overhead costs, which give them an unfair competitive advantage over legitimate, law-abiding businesses.

In addition to discussing the goals of the LETF, the Enforcement Committee heard from the Chief of EDD’s Compliance Development Operations, Dan Kurttila, who emphasized their commitment to the construction industry and the Board’s strategic objective to combat the underground economy.


Like the ‘synching’ on your individual mobile, computer or server, State government networks are talking, ‘pushing’ data sharing and improving the odds unlicensed contractors will be caught in California.