CSLB and Fresno County District Attorney's Office Take Aim at Valley's Underground Economy
Two-day undercover sting operation surfaces unlicensed, uninsured operators
SACRAMENTO —The Contractors State License Board (CSLB) and Fresno County District Attorney's Office (DA) teamed up this week to conduct a two-day undercover sting operation in the city of Fresno.
Conducted by CSLB's Statewide Investigative Fraud Team (SWIFT), investigators posed as homeowners and invited suspected unlicensed contractors to bid on a variety of home improvement projects including fencing, concrete, painting, iron fencing and decking.
SWIFT investigators targeted those who advertised construction services online and in local publications, and those who had been stung for contracting without a license in prior operations. California Business & Professions Code requires that all contractor advertisements include a valid state contractor license number. Those without contractor licenses may do jobs valued at less than $500 for labor and materials, but they must state in their ads that they are not a licensed contractor.
If a suspect's bid at the sting house was more than $500 and they didn't have a license, nor had any other legal violations, they were issued a misdemeanor Notice to Appear (NTA) in Fresno County Superior Court sometime in January 2010. During the two-day operation, 26 NTAs were issued. One of those suspects was arrested at a sting just three months ago in the city of Hanford. Another had two unpaid administrative citations from CSLB, totaling unpaid fines of $1,800.
"Consumers might think they're saving money by hiring the unlicensed, uninsured person who offers a low bid," said CSLB Registrar Steve Sands. "But, if somebody is hurt while working on the project and doesn't have workers' compensation insurance, the homeowner could be held liable for any medical expenses, which would undoubtedly prove much more costly."
Contractors are also required to carry bonds that enable consumers to recoup losses should a mistake or accident occur. If the contractor is unlicensed, the homeowner's only recourse may be through small claims court if that homeowner is even able to find the unlicensed operator.
The Fresno County District Attorney's Office will be responsible for prosecuting these cases, as well as investigating cases where there were violations of inadequate or no workers' compensation insurance for employees (Labor Code 3700.5).
In California, licensed contractors are required to include every employee in their workers' compensation insurance, unless they certify they are the only employee. The exception to this is roofing contractors (C-39 classification), who are required to carry workers' compensation insurance even if they are a sole proprietor. Failure to obtain a contractor license and proper insurance puts consumers at risk and places licensed, legitimate contractors at a competitive disadvantage. Rarely, if ever, do unlicensed contractors carry workers' compensation insurance.
The DA's Office took the following actions against those caught operating without workers' compensation insurance:
- Issued two citations for failure to carry workers' comp insurance;
- Issued two letters requiring that proof of coverage be submitted; and
- Will further investigate five cases to determine whether coverage is appropriate.
In addition, the DA's Office issued citations to two suspects with warrants. One was a $20,000 misdemeanor warrant for failure to comply with a court order for parenting training, and the other a $20,000 civil warrant for failure to appear in court for a child support hearing.
CSLB urges consumers to remember the following tips when hiring a contractor:
- Be especially hesitant when approached by someone offering home improvement services door-to-door.
- Verify the contractor's license by checking online at www.cslb.ca.gov, or via CSLB's automated phone system at 1-800-321-CSLB (2752).
- Don't pay more than 10% down or $1,000, whichever is less. There is an exception made for about two dozen licensees who carry special coverage to ensure consumer protection and may ask for more than a ten percent down payment. Those exceptions are noted on the CSLB Web site.
- Don't pay in cash, and don't let the payments get ahead of the work.
- Check references, and get at least three bids and a written contract before your project begins.
- Contact CSLB if you have a complaint against a contractor.
In 2009, CSLB, which operates under the umbrella of the Department of Consumer Affairs, marks its 80th anniversary of protecting consumers by regulating California's construction industry. Today, CSLB licenses about 315,000 contractors. In any given year, complaints are filed against only 3% of licensed contractors. In fiscal year 2008-09, CSLB helped consumers recover nearly $36 million in ordered restitution.
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