Multi-Agency Operation Highlights Dangers of California's Underground Economy
Contractors State License Board cites dozens in undercover operation
SAN JOSE — The Contractors State License Board (CSLB) is joining other state and local agencies in putting unlicensed operators on notice that they won't get away with operating outside the law. This week, CSLB's Statewide Investigative Fraud Team (SWIFT) spearheaded a Northern California Underground Economy Task Force Operation conducted in Santa Clara County. A total of 87 people were caught in the web that included undercover stings and construction site sweeps over a two-day period.
Northern California Underground Economy Task Force participants included:
- Contractors State License Board
- Employment Development Department
- Department of Industrial Relations-Division of Labor Standards Enforcement
- Department of Insurance Fraud Division
- Santa Clara County District Attorney's Office
The Task Force conducted the operation to underscore the fact that illegal operators are working throughout Northern California. "Consumers, legitimate business people, and the state are all hurt by this type of underground activity," said CSLB Registrar Steve Sands "It hurts legitimate licensed contractors who operate fairly and follow the law. Homeowners who hire unlicensed workers can be ripped off, have their property damaged or be liable if a worker is injured."
Suspects were invited to two sting locations in San Jose where they were asked to give bids on various home improvement projects over a two-day period (March 15-16). The projects included painting, roofing, landscaping, building a deck, pouring concrete and removing a tree. Those targeted included subjects of current complaints and those who are advertising for their services.
A total of 59 unlicensed operators were given Notices to Appear (NTA) before a Santa Clara County Superior Court judge to answer the misdemeanor charges. Those who qualified were also encouraged to get their contractors' license, and were given the application paperwork. The violators could face a maximum of six months in jail or a $1,000 fine for the first offense. A second violation carries a mandatory 90-day jail sentence. Others received citations for working with a suspended license and less serious technical violations.
By law, all contractors who perform work that totals $500 or more (labor and materials) must be licensed by the CSLB. Because many unlicensed operators don't comply with the workers compensation laws, they often submit lower bids on jobs. But, if one of their workers is injured on the job, the homeowner could be considered liable. And, if a deal goes bad with an unlicensed contractor, the homeowner has veryfew options.
In addition to the sting, compliance check sweeps were performed at various construction projects around the San Jose area. The Department of Industrial Relations-Division of Labor Standards Enforcement assessed civil fines totaling $41,780. The fines were levied on companies that weren't paying workers' compensation insurance, or those who were paying workers in cash and not paying payroll taxes. The Santa Clara County District Attorney's Office cited six others for workers' compensation violations.
It's estimated that California is losing between $60 and $140 billion a year in revenue due to underground activity.
So, what can a consumer do to protect themselves? Before signing any papers, homeowners should ask the contractor to see their CSLB license. They should then check out that license by going online to the CSLB Web site at www.cslb.ca.gov or by calling CSLB's toll-free automated telephone system at (800) 321-CSLB (2752). They can also download or order helpful publications, such as "What You Should Know Before You Hire A Contractor", free of charge.
The CSLB urges consumers to follow these tips when dealing with a building contractor:
- Hire only licensed contractors and ask to see the license
- Don't rush into decisions and don't hire the first contractor who comes along
- Be especially hesitant when approached by someone offering home improvement services door-to-door, especially when they will use material they claim is left over from another job
- Verify the contractor's license by checking online or via CSLB's automated phone service at 1-800-321-CSLB (2752)
- Don't pay more than 10 percent down or $1,000, whichever is less
- Don't pay cash, and don't let the payments get ahead of the work
- Get three bids, check references, and get a written contract
- Contact the CSLB if you have a complaint against a contractor
The Contractors State License Board operates under the umbrella of the California Department of Consumer Affairs. The CSLB licenses and regulates California's 278,000 contractors, and investigates more than 20,000 complaints against contractors annually.
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