Despite an optimistic economic outlook, California employers continue to find their foothold in an unpredictable and slippery economy. But when it comes to dealing with their employees, some employers in California are trying every way possible to save more money, particularly through a deliberate wrong classification of employees to deny them their rightful pay and options.

For some reason, employers see California labor laws to favor the employees, which is not true! The California Department of Industrial Relations (CDIR) oversees different labor laws for employees in California. The aim is to ensure that all employees who work in the state benefit from their employment contract and that they are lawfully paid for any work they rendered to their employer. With that said, there are complicated aspects in the California labor law for salaried employees that need full understanding for both employee and the employer’s rights to be preserved. In this post, we are going to examine what the California labor law says as regards salaried employees. Meanwhile, we need to understand who is a salaried employee.

SALARIED EMPLOYEE

A salaried employee (or salary employee) is a worker who receives a full pre-determined amount of money from their employer on a weekly, bi-weekly, or monthly as a paycheck, regardless of the number of hours they work per week. In California, salary employees are classified as either exempt or nonexempt. The word “Exempt” implies that employers do not have to abide by the overtime statute or the minimum wage when paying exempt workers. To determine whether an employee is exempt or non-exempt will depend on the kind of job the employee does, how much the employee receives, and how the employee is paid.

EXEMPT AND NON-EXEMPT SALARY EMPLOYEE

For an employee to be exempt, they must receive the same regular pay or salary every week, regardless of the amount of work they do or the number of hours they work. As at the time of writing, the minimum salary requirement for exempt salaried workers, according to the Fair Labor Standards Act is $684 per week or $35,568 per annum – an increment from the $455 per week or $23,660 per year. This increment may not have much impact on California that already has a higher salary scale. Effective from January 1, 2020, California labor law requires employers with at least 26 employees to pay $1,040 every week or $54, 080 per annum. Likewise, nonexempt workers may receive a predetermined salary, but it should be equal to the federal minimum wage or the state minimum wage, whichever one is higher. Although any worker can be compensated with a salary, only a few jobs are eligible for exemption.

Unavailability Of Work Or Business Closures

If a business closes down for some days in a full week, even for a holiday, all exempt employees should receive their full pay. The same applies if there is no work available for the employee to do. For nonexempt employees, they may only be paid for the time they actually worked.

SALARIED EMPLOYEES AND OVERTIME PAY IN CALIFORNIA

Subject to California labor law, the general employment rule is that overtime pay is due for every work that exceeds 8 hours a day and 40 hours in a week. Nevertheless, employers often tell some employees that they are not eligible for overtime pay since they are being paid a salary instead of an hourly wage. This way, the employee is made to believe that they are required to work for long hours without the right to any paid overtime. The truth is considerably more intricate. If you are employed in California, you may have the assumption that you are eligible to paid overtime if you work for extra hours. But it is the decision of the employer to prove that you are being paid enough to qualify for an exemption.

Exempt salaried employers in California do not have to receive overtime pay if they work extra hours, although nonexempt salaried workers are entitled to overtime. While almost all salary employees are nonexempt, there are exceptional cases where an employee can be nonexempt and still receive hourly pay. According to California labor law, salaried employees may be entitled to overtime pay based on some specific situations.

In a short while, we will consider the eligibility of both exempt and nonexempt salary employees as regards receiving overtime wages.

Nonexempt Salaried Workers And Overtime Pay

Non-exempt salaried workers fall under the minimum wage and overtime principles of the FLSA. Consequently, employers must be specific with the number of hours an employee is expected to work per week. According to California labor law, nonexempt salary employees are entitled to receive overtime pay of 150% (1½) times the employee’s regular pay for any hours the employee worked in excess of 8 hours in a workday, 40-hour workweek or hours worked on the seventh consecutive day worked in a workweek. This also applies to virtually all California employees.

One of the frequently asked questions is whether employers can require a nonexempt employee to work on a specific schedule and monitor their work hours. If a worker is nonexempt, employers have to keep a comprehensive time record, which must be by the clock.  Closely supervised employees such as the clerical employees, production workers, and service representatives, usually execute nonexempt works. However, an exemption is based on the actual job functions, as defined by California labor law.

Furthermore, any pre-printed time record that shows eight hours of work per day every week may not be considered as genuine. This is because employees usually work more than 8 hours every day, and the California labor commission (CLC) may regard such a time record as no record at all.

Exempt Salaried Workers and Overtime Pay

Even if a worker meets the minimum salary requirement for exempt salary workers, this only does not classify the worker as exempt from overtime pay. It is just one of the three tests that are used to decide on the exempt status of an employee. Other tests include job duties test and salary basis test. If an employee receives more than the minimum salary per year but fails at least one of the two other tests, they would still be regarded as a nonexempt worker and be paid for overtime.

Exempt workers may include unionized workers in some industries, white-collar employees and independent contractors. The California Department of Industrial Commissions (CDIC) has classified exceptions for some employees. These include the administrative, the professionals (learned, computer, creative and intellectual), outside sales exemption, and the executive. The Administrative or the executive employees may be exempted from overtime wages only if their work is primarily managerial in nature, and they must have meaningful authority to make independent decisions. Professionals whose work is mainly intellectual may also not be eligible for overtime wages. They may include lawyers, engineers, and doctors. Lastly, outside sales reps and some computer professionals can be exempted too.

One thing is sure; not all salaried employees are exempt from being paid overtime. If you are nonexempt, you may receive overtime wages for any extra hour you work other than what is in your employment contract. California law on overtime pay can generally be confusing. If you think you have been wrongly denied overtime pay, a reliable employment law attorney from United Employees Law Group would be glad to help you establish your rights and options.

OVERTIME PAY CALCULATION

When calculating overtime pay for a salaried employee, divide the annual salary of the employee by 52 weeks to get the weekly salary. After that, divide the weekly payment by the number of hours that salary is based on per week to get the standard hourly rate. Multiply the hourly rate by 1.5 to get the overtime pay.

REST AND LUNCH BREAK FOR SALARIED EMPLOYEES

Subject to the California Labor Commission, the exempt salaried workers are excluded from California’s lunch and rest break laws. However, nonexempt salary workers are eligible for at least 10 minutes uninterrupted, unpaid rest break for every 4-hour work shift. They are also entitled to lunch break of at least 30 minutes following every 5-hour work shift.

CALIFORNIA LAW ON SALARY REDUCTION

According to California labor law for salary employees, employers are not permitted to reduce the salary of an exempt worker even if they only work fewer hours than the normal time. Once an exempt employee does any work on a particular day, they are entitled to payment for the entire day. Employers may, however, deduct for missed work, if the worker misses an entire day for personal reasons or take sick leave after exhausting all their sick leave permissions. Employers are allowed to create a policy that demands their employee to use any available vacation time if there is inadequate sick leave to cover an absence. Conversely, when employers furlough exempt workers for business purposes, they must pay their full salary except if the leave lasts a whole week.

PAY DEDUCTIONS FROM SALARIED EMPLOYEES

Apart from the few exemptions that are related to the public sector employees, the California labor law does not require any employer to deduct pay from an employee’s salary for missing partial days, such as arriving late or leaving work early, or due to a personal appointment or sickness. Generally, an employer cannot dock the pay of a salaried employee as a disciplinary measure and/or as penalties for safety violations. An employer’s deduction of less than one day is not permitted. However, there are instances where an employer can deduct pay, such as when a salaried worker misses a full workday for personal reasons other than being injured or sick. Likewise, an employer may deduct pay from salaried workers if they take a day(s) off under the Federal Family and Medical Leave Act.

NOTE: If an exempt employee is absent from work due to a disability or sickness and the employer already has benefits plan in place, the California labor law does not require the employer to pay for those days the employee is away even if the employee does not get the compensation plans. Likewise, to take these pay deductions, the employer needs to maintain a good plan that provides compensation for non-work related accidents or injuries. For more information on salaried employee rights in California, you can consult a reputable employment attorney.

WORKING ON A DAY OFF

The California labor commission does not require that an employer should pay exempt salary workers for resuming early, working late, working on weekends, or for working on their off day. Employers may certainly decide to pay these workers for extra work(s) done, but it is strictly not compulsory unless extra pay for such situations is already included in the employee’s job contract.

MINIMUM WAGES

Subject to the California labor law, exempt salaried employees should be paid at least monthly at no less than twice the minimum hourly rate. The majority of other employees should receive pay at no less than twice a month and at least the state’s minimum hourly wage.

HOW DO I KNOW IF A SALARY POSITION IS RIGHT FOR ME

In a simple, clear statement, a salaried job position may be ideal for you if you appreciate the security offered by regular pay. But if you detest the idea of working extra hours without any extra pay, then you might prefer an hourly-paid job.

THE CALIFORNIA LAW ABOUT EMPLOYER’S RETALIATION

Subject to the California labor law, businesses face great penalties should they decide to strike back at salaried employees who pursue their lawful wages and other compensations. Employers cannot demote, terminate or otherwise harass workers for seeking their fair pay. To protect employees, the California labor law provides for damages and injunctive relief ordering the employer to refrain from prohibited behavior by monitoring the employer’s conduct and interests.

CONTACT US

If you think that you have been wrongly classified as an exempt worker and are deprived of the wages you are legally entitled to, do not hesitate to contact United Employees Law Group. Our employment labor lawyer will be glad to appraise your claim and help you decide on how to proceed. They will work to ensure that you are informed of your rights and that you are offered the qualified legal help and representation you deserve. For a free legal evaluation, do not hesitate to contact us.

Reference

• https://www.dir.ca.gov/dlse/faq_overtimeexemptions.htm
• https://www.dir.ca.gov/dlse/faq_overtime.htm
• https://www.dwt.com/blogs/employment-labor-and-benefits/2019/09/new-fisa-salary-requirement

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It is very important for every employee to have sufficient knowledge concerning the minimum wage increase in 2019 so that they know their rights and voice their concerns just in the event that their rights are violated. This article thus aims to help all California employees get to know their rights on the California minimum wage laws.

The California minimum wage laws were instated to ensure a gradual increase in the minimum wages by $1 on hourly basis until a minimum wage rate of $15 was reached. As of 1st January, 2019 the expected wage rate is expected to increase to $12 per hour.

Pros of the Minimum Wage Increase

• Employees will earn higher earnings and as a result improve their living standards. They may also be able to save and later invest to start their own businesses. This will in turn be very important in the development of the state as a whole.
• Increase in the workers’ earnings serves as a motivation to hard work in their duties. This will therefore improve their productivity in the businesses and hence contribute to the success of the enterprises.

Cons of the Minimum Wage Increase

Despite the advantages on the increase in the minimum wage rate, businesses will be forced to spend more on the employees wages and hence reduce their total profits. Large businesses are a victim of this since most of the company’s returns are channelled to the employees payments.

Frequently Asked Questions

• Employees have always wondered where to take their wage complaints in case the laws were not adhered to. The United Employees Law Group (UELG) is always ready to listen to every employees’ complaints in California and therefore all workers are encouraged to voice their grievances through the group. Government authorities in the labor sectors are also available for such problems.
• The kind of evidence to provide just in case the wage increase was not implemented by a particular business is also another question bothering workers. Employees can always take their identification documents together with their pay slips to the UELG support team on such matters.
  As an employee, always ensure that you know your rights and speak up when any of them are violated. You can also visit the UELG website more details and for any other workplace disputes.
  

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Frequently Asked Questions (FAQs)

Q. What are damages incurred by an employee?

These are the wages that have not been paid.

Q. What are the penalties for employers for committed missed meals and rest breaks?

In California, an employer is supposed to grant a ten-minute rest for every 4-hour work ( part of 4-hour period). An employee must get an unpaid meal break for 30 minutes after the five-hour duration.

An employer must pay a penalty of one hour pay at the standard rate for every workday when meal breaks are not there. Similar rules will apply other breaks.

Q. When is an employee eligible liquidated damages for minimum wage claims?

If an employee was being paid lower than minimum wage, they are eligible to get liquidated damages. The amount is equal to the lost wages.

Q. Which law helps workers collect unpaid wages?

S.B. 588 signed in 2015 is aimed to help employees to collect unpaid wages. In case the employer fails to pay the judgment for unpaid wages, regulators are empowered to take possession of the property and bank accounts.

Q. What should a new hire get?

Employers have to go according to wage notice norms. Thus, under California Wage Theft Act,

employers need to serve a written notice to new hires on wage inform ion.

How UELG (United Employees Law Group) Can Help Employees

Employees should take the help of UELG thanks to the complexity of the law, various other issues like tame lags, etc. In most case, employee necessitates an attorney, to fight the case to get the unpaid wages. UELG will make it easy by offering the necessary professional help and advice to employees. They will help clear every doubt and concern of employees. With their, so many years of experience in dealing with employer-employee wage-related cases can easily get settled.

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How many of you work late into the night? Do you get compensated for the extra hours? These are some of the employment issues that arise in various organizations. However, today you can get legal representation from experienced employment attorneys such as UELG. But first, it is important to understand what exemption from the overtime laws mean. For better understanding, one should get acquainted with the following terms:

1. Overtime

Overtime is the extra working hours beyond the normal working hours. The normal working hours depend on various factors, for instance:

• Agreement between the employer and the employee on the working hours
• The profession or trade e.g. Doctors, Engineers, Nurses, Drivers, Teachers, Lawyers, among others.
• Legislation; the labor or employment laws

2. Labor laws

Labor laws are present in every state or country. It is essential as it helps prevent disputes among workers and employers. An employer may decide to force his or her employees to work extra hours without compensating them. Alternatively, the law considers other factors such as health of the employees. This ensures productivity as it preserves the health of workers.

Exemption from overtime laws

With all that said, the concept of overtime can now be explained. First, if you work for longer hours, your employer should pay you. However, not all employees get compensated. When you get paid for the extra time, you are Non-exempt employee otherwise you are exempt employee. In other words, you are exempted from overtime pay. For more information, read through the following topics:

Affected employees

The labor law affects the executive, administrative, and professional employees. They further include the following;

• Employees in the computer software field: If they are paid on hourly basis and they meet the requirements stated in the orders, they are exempted from the overtime laws.
• Drivers: if you are a driver plus your working time is regulated by the U.S Department of Transportation Code of Federal Regulations, then you are exempted. Nevertheless, those drivers whose hours are regulated by the Title 13 of the California Code of Regulations are exempted as well. In addition, Taxi cab drivers do not enjoy the privileges of non-exempt employees.
• Airline employees: Only those workers who work over 40 but not more than 60 hours during the work weeks due to changes not required by their employer but only at the request of the employee.
• Announcers, News Editor or Chief Engineer working in a radio station with a population less than 25,000 people.

Other employees affected include:

• Baby sitters especially under 18 years of age babysitting a minor in the employer’s house.
• Those employees covered by a collective bargaining agreement.
• Irrigators,
• Sheepherders
• Professional actors

Bottom line

There are legal institutions that deal majorly with employment issues. You can visit the United Employment Law Group for any assistance.

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Any association proposed to stand for the interests of workforce in negotiations with a company over working conditions, wages and time limit. Labor unions are many times industry-specific and to be further familiar in construction, manufacturing, transpiration, mining and the non-private sector.

Employers and laborers seem to perceive employment on a vastly different approach. Subsequently how can both sides arrive at any type of agreement? The response lies in unions. They have cast a part in the worker-employer exchange of ideas for centuries, however in the former few decades several aspects of the business atmosphere have been altered. Keeping this in mind, it’s necessary to recognize how unions play roles into the modern business environment, along with what part unions occupy in the present economy.

The influence of labor unions lies in their two core tools of influence: limiting labor supply as well as escalating labor demand. Through combined bargaining, they also bargain with the employers about the paid wages. Laborers Unions requests for a privileged wage; however this can lower the hours demanded by employers. Given that an elevated wage rate equals to less labor activity per dollar, they mostly face problems while negotiating superior wages and will often concentrates on increasing the labor demand in its place. They can utilize several different techniques to raise labor demand:

• Demand for minimum wage boost. Minimum wage raises the labor expenditure for employers by exploitation of low-skilled workers. This lowers the gap among the wage rate of low-skilled laborers and high-skilled ones. However, high skilled are taken by the union often.
• Raise the marginal productivity of low skilled and unskilled labors which can be attained through training.
• Lobbying for firm immigration regulations limit the raise in labor supply, mainly of workers from overseas. A restraint in the supply of low-skilled laborers, what is diversity labor, rises up their wages.

Unions boast an exclusive legal spot and sometimes they function like a monopoly since they are resistant to antitrust laws. Since unions manage, or can wield a superior influence on, the supply of labor of a specific industry or company, they can force non-union laborers from decreasing the wage rate. They are capable of this as legal guidelines grant a certain height of protection to activities performed by union.

The expression “bargaining” might be deceptive, since it is perceived as people haggling at a marketplace. However, the objective of bargaining collectively is to perk up the worker’s status while still maintaining the employer’s business. The bargaining affiliation is continuous, not just an affair.

If unable to negotiate, or not content with the collective bargaining results, they might initiate a strike or work halt.

Unions have without a doubt left mark on the economy, plus maintain to be major forces that shape the commerce and political setting. They are currently in a variety of industries, including manufacturing to the government, and also assist skilled and unskilled labors in attaining improved wages and working environment.

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The other half of the country may be buried in snow, not so much in California. The golden state still battles heat related issues for workers in some industries. New mandated protections of break time to improve working conditions were added to the CA labor codes for this year, new labor law SB435.

Plenty of employees will be unaffected, but if you work outdoors performing a labor intensive job in southern California you should be aware of your rights to PAID break time. The CA office of Industrial Welfare is charged with the regulation of safe and healthy working conditions as well as fair wages in certain industries. Once SB435 was voted in, all employees are now required to have a paid rest period for every four hours they spend on the job, when possible this is to be near the middle of the four hour period in order to allow the worker time to cool down and recover from strenuous work.

The biggest change provided by the new law lies in the definition of that rest time. During the rest break no employee can be asked to perform ANY work related duties. If you are given your break from working on the production floor, they cannot require that you sit in the office and work on a desk job while you cool off.  The cool off period must also be separate from your lunch period.

It is not required that any employee working less than three hours get a break, but if you work more than four hours and have been repeatedly denied these breaks or not paid, you may be able to collect interest and penalties on top of the base time, overtime or double time you may be owed.

While you cannot be given any work to do during these rest periods, the company can dictate that you must stay on site because you are being paid. Because you are still “clocked in” your employer can require that you adhere to behavioral standards.  This means they have the right to tell you there is no smoking on the premises, which means if you are required to stay onsite during your break you may not smoke.

Certain exceptions do exist as usual, mostly pertaining to any 24 hour care and on-call workers in specific industries such as assisted living and care facilities. Because these laws tend to get more complicated the deeper you dig, the best defense you have is a knowledgeable Labor Attorney who knows them inside and out.

United Employees Law Group has a team of attorneys and support staff waiting to help you understand just what your rights are and we help employees collect every day. Call now and get the assistance you need.

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Wage Theft Prevention Act of 2011

According to Section 2810.5 of AB 469, at the time of hire all employers must now inform employees in writing of the rate of pay and how wages will be calculated. In other words, hourly, daily, piece rate, salary, commission or by some other method. If applicable, the employees must also be informed of their overtime rate, allowances, the regular pay date, the name of the business or any other names the business operates under as well as the physical mailing address for the business. AB 469 also requires that any changes made to this information be given to the employees in writing within 7 days of the change. Not only does the existing law require employers to pay penalties and back wages for violating minimum wage laws, it now criminalizes certain wage violations by providing that any employer who willfully violates specified wage orders or willfully fails to pay wages due, if convicted, is guilty of a misdemeanor. It’s important to note that the statute of limitations for collecting penalties under the Division of Labor Standards Enforcement (“DLSE”) has increased from one to three years.

Commission Contracts will be required by 2013

By January 1, 2013 AB1396 will amend the labor code to require employers to have written contracts with all employees who will receive wages from commissions. This contract must also define how these commissions will be calculated and when they will be paid. This does not include bonuses or short term incentives. This should alleviate the guess work and should allow the employees the ability to track and determine, in advance, what their commission pay will be. AB1396 will be particularly helpful to employees that are classified as inside or outside sales people.

Wage Garnishment : Medical Debts are now Exempt

Currently the law requires employers to garnish an employee’s wages up to the portion of the earnings the debtor proves is necessary to support himself or his family.  Things like child support payments, back taxes, credit card debt, and other debts can all be subjected to wage garnishment. AB 1388 adds an exemption for debt that is incurred “for the common necessities of life furnished to the judgment debtor” or his or her family, including hospital services and other medical debts.

Even though most of these new laws will take effect January of 2012, it is recommended you speak with an experienced California labor law attorney as soon as possible if you have any questions or concerns about your employment situation.

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In 2012  the bills  A.B. 592 and S.B. 299, signed by California Gov. Jerry Brown, attempted to fill coverage and enforcement gaps between the state and federal leave laws. SB 299 and AB 592, as well as SB 222 and AB 210, propose that  pregnant employees will maintain their insurance benefits while on pregnancy-related leaves. These new laws will have a significant financial impact on employers big and small, but will also give pregnant employees a little piece of mind.

The federal Family Medical Leave Act only required the same level insurance coverage to pregnant employees as they had previous to going out on leave. But it only applied to employees who were employed at a company with 50+ employees and if they had worked there over 1 year, or more than 1,250 hours. Often pregnant employees working for companies with less than 50 people were unprotected

The California Family Rights Act (CFRA) allows leave for bonding with an employee’s newborn, newly-adopted or foster child. But again this only applies to a company of 50 or more employees. However, pregnancy itself is not a condition covered under CFRA. Pregnancy and related medical complications are covered under the PDL law.

California Pregnancy Disability Leave, (PDL); under the California Fair Employment and Housing Act, employers with 5 or more employees must give up to 4 months of unpaid disability leave to women facing time off work because of pregnancy, childbirth, or a related illness. Prior to Jan. 1, 2012, employers with less than 50 employees had the right to discontinue health insurance or other benefits if this is their policy for disability leave.

A.B. 592 and S.B. 299 will change how medical insurance coverage will be maintained during PDL. Not only must the employer with 5 or more employees maintain medical insurance for their employees while out on leave, but California Insurance Code mandates that all individual health insurance policies must provide coverage for maternity services for all insured individuals covered under the policy. Under existing law, if a health insurer provides maternity coverage, it may not restrict inpatient hospital benefits. The change in law, however, actually mandates that the maternity coverage be provided.

If you are going out on maternity leave and your employer has put restrictions on your time off or has not given you the option of selecting maternity medical coverage, it is recommended that you contact a San Francisco employment law attorney to fully understand your rights and options. Many labor law attorneys offer free or low cost preliminary consultations, and in certain cases may represent you on a contingency fee basis.

If you have any questions about this article or our blog, feel free to call us at:
San Francisco – (415) 200-0012 or (415) 230-2755

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The Holidays are over and now comes the time all sales people dread, the return season!

Returns are inevitable, but how much can they take back from the commissions you already got paid?

California Court of appeals has maintained that employers do have the right to take back previously issued commission wages. This practice is commonly referred to as “charge backs”. In DeLeon v Verizon Wireless, the courts view charge back as the return of an advance on wages. In others words, the original payment of commission was considered an advance on possible earned wages based on the sales the employee initiated. But if for some reason the sale was not completed, was cancelled or returned, the advanced commission could be returned to the company as a charge back or deduction of current commission wages.

DeLeon was a little more complicated than this. Verizon held a period of 1 year from the original sale as the time in which they could issue a charge back. So Verizon was watching customer accounts a year after to see if the client returned the product or canceled the service. If the sale was revoked within that year, the sales person was issued a charge back and the money was returned to the company.

When Considering DeLeon in conjunction with last month’s decision in Sciborski v Pacific Bell, you may notice the courts will distinguish a legitimate contractual condition on earning a commission from an unlawful “deduction” or “withholding” of wages. Under the principles discussed in these two opinions it appears that courts will generally allow employers to deny a commission payment if an employee fails to fulfill a term that:

•  Is clearly expressed , preferably in writing, before the employee performs the work; and
•  Is related to the sale itself.

By contrast, courts will tend to find a violation of California law where an employer denies a commission payment for a reason that:

• Is unrelated to the successful completion of the particular sale itself;
• Is outside the employee’s ability to control or influence;
• Is unpredictable or arbitrary; or
• Is shifting a cost of doing business which the employer should pay to the employee.

It may be a long time before the case law is crystal clear in this area but the main outline of the rule is starting to come into focus.

These cases, like any employment law issue, can get very complicated.  The right advocate can make ALL THE DIFFERENCE!

Call United Employees Law Group now for a free review of your unique case.

If you have any questions about this article or our blog, feel free to call us at:(415) 200-0012

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No, this is not a crazy movie with mind control and robots; though the title of Labor Enforcement Task Force may sound a little ominous, they are actually working to help improve conditions for hardworking employees. Also known as the LETF, it was put in place for the benefit of both employees and LEGAL businesses working to follow the letter of the law. This coalition of enforcement agencies within the California State government operates under the Department of Industrial Relations to help enforce work condition violations, wage violations and other illegal actions by companies working in what they call The Underground Economy.

Members of the LETF coalition include:

-The Division of Occupational Safety & Health

-The Division of Labor Standards Enforcement

-The Employment Development Department

-The Contractors State Licensing Board

– The California Department of Insurance

– The Board of Equalizations

– The Bureau of Automotive Repair

– The State Attorney General, and

-The Alcoholic Beverage Control agency (ATF).

One of the main objectives of this group is to weed out and crack down on companies operating without proper licenses, effectively working under the radar and avoiding paying proper taxes, carrying legal coverage for workers compensation, or following labor codes pertaining to minimum wage and other wage requirements for their employees. Businesses like these which operate without oversight create unsafe working conditions for employees, do not pay fair wages, and hurt the local business economy by doing so. This underground economy creates an imbalance where the legally operating businesses that pay the correct wages and follow rules for taxes and licensing are unable to match the low undercutting prices of the “black market” businesses. Because these illegal businesses pay no taxes, the government has a clear reason to support the coalition’s initiative, but you should too. When these underground businesses are shut down it means better wages and better, safer working conditions for employees as well.

While this “underground economy” is certainly an issue throughout the US, it is a HUGE industry here in California. Our State alone accounts for an estimated loss that could be as high as $28 BILLION a year from the lack of insurance, payroll taxes, income and business taxes and licensing. The numbers paint a clear picture as to why the Government wants to crack down on the businesses operating underground, but this kind of discrepancy in the economy places far too great a burden on the honest, legal companies not trying to abuse the system and the great resources of the Golden State.

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