BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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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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