California Department of Insurance and Other Agencies Continue Efforts to Crack Down on “Thriving Underground Economy”


In late May, the California Department of Insurance (CDI) issued a press release announcing that it was involved in a multi-agency team that conducted a statewide outreach and enforcement effort targeting what it describes as a “thriving underground economy.” The enforcements teams included the Department of Industrial Relations, Contractors State License Board, CDI, Franchise Tax Board and Employment Development Department and several district attorney investigators.

The press release reports that, on May 20, 2015, enforcement teams “visit[ed] more than 75 businesses to educate business owners about their obligations to comply with insurance, licensing, workplace safety, labor laws and tax codes.” This effort is “focused on curbing California’s multi-billion dollar underground economy.” The enforcement teams reportedly visited a variety of businesses, including residential landscaping, commercial and residential construction, car washes, restaurants, carpet and flooring companies, bail bond agents, supermarkets, auto repair shops, and towing companies. The press release further reports that safety, licensing and insurance violations were found at approximately 1/3 of the businesses visited and that some businesses were issued immediate stop work orders and others were issued administrative citations; more than 15 citations were reportedly issued along with multiple stop work orders and nearly $300,000 in fines.