BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 270|
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THIRD READING
Bill No: SB 270
Author: Padilla (D)
Amended: As introduced
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 4-0, 4/10/13
AYES: Lieu, Wyland, Leno, Padilla
NO VOTE RECORDED: Yee
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Underground economy: enforcement actions
SOURCE : Author
DIGEST : This bill directs agencies participating in the Joint
Enforcement Strike Force (JESF) and the Labor Enforcement Task
Force (LETF), to the degree feasible, coordinate their law
enforcement activities and exchange information to better
facilitate their law enforcement activities.
ANALYSIS : Existing law establishes the JESF, administered by
the Employment Development Department (EDD), to combat
California's Underground Economy. The JESF is a coalition of
California state government enforcement agencies that work
together to combat the underground economy to ensure a level
playing field for California businesses. The goals of the JESF
are to:
1.Eliminate unfair business competition.
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2.Protect workers by ensuring that they receive all benefits to
which they are entitled by law relating to wages and hours,
health and safety, and income replacement.
3.Protect the consumer by ensuring that all businesses are
properly licensed and that they adhere to the State's consumer
protection regulations.
4.Reduce the burden on law-abiding citizens and businesses by
ensuring that all businesses and individuals comply with the
State's licensing, regulatory, and payroll tax laws.
5.Reduce the tax gap by increasing voluntary compliance with the
State's payroll tax laws to maximize the State's General and
Special Fund revenues.
The existing LETF, under the administration of the Department of
Industrial Relations since January 2012, was created to combat
the underground economy in California to create an environment
where legitimate businesses can thrive. The goals of the LETF
are 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
penalties due from employers.
3.Eliminate unfair business competition by leveling the playing
field.
4.Make efficient use of state and federal resources in carrying
out the mission of the LETF.
The LETF coalition is a partnership that includes
representatives from the Labor & Workforce Development Agency,
Department of Industrial Relations, including Division of Labor
Standards Enforcement and Division of Occupational Safety and
Health (DOSH), EDD, Contractors State Licensing Board,
California Department of Insurance, Board of Equalization,
Bureau of Automotive Repair, State Attorney General and District
Attorneys throughout California. In this joint effort,
information and resources are shared to ensure hard-working,
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compliant business owners and their employees have an
opportunity for healthy competition.
This bill directs agencies participating in the JESF and the
LETF, to the degree feasible, coordinate their law enforcement
activities and exchange information to better facilitate their
law enforcement activities.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/22/13)
California Association for Health Services at Home
California Rural Legal Assistance Foundation
Spa & Pool Industry Education Council
ARGUMENTS IN SUPPORT :
Proponents argue that violations of labor and tax laws often go
hand in hand. When an employer fails to pay a worker minimum
wage or overtime pay or utilizes unreported cash payments, the
state loses revenues from income and payroll taxes that fund the
unemployment insurance system, paid family leave, disability
insurance and state general fund programs.
The author's office maintains that, unfortunately, state
enforcement efforts in the underground economy are limited due
to limited resources and a growing economy.
According to the author's office, between 1970 and 2011, the
labor force in California grew approximately 125%. However,
staff positions at Division of Labor Standards Enforcement have
only grown 45% since 1970. In order to pool limited resources
to combat the underground economy, the Legislature created the
Joint Enforcement Strike Force and the Department of Industrial
Relations created the Labor Enforcement Task Force. Each entity
is comprised of various state and federal agencies; however,
both have some overlapping membership.
The author's office contends there is no formal process for
these two entities to coordinate efforts and share information.
This bill directs the two task groups to coordinate efforts to
combat the underground economy.
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Overall, proponents argue that employers operating in the
underground economy hurt everyone and the increased coordination
of efforts between enforcement agencies will help to reduce
disparities between employers that do not adhere to the law and
those that do.
PQ:ej 4/22/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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