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Home » Santa Clarita News » State To Launch Crackdown On Underground Businesses

State To Launch Crackdown On Underground Businesses

dirlogoThe Department of Industrial Relations (DIR) announces the Jan. 1 launch of the newly created Labor Enforcement Task Force (LETF). LETF is a collaborative effort between state agencies to combat the underground economy and to improve California’s business environment where legitimate employers can thrive.


The primary partners of the LETF include DIR, the Employment Development Department, Contractor’s State Licensing Board, Board of Equalization, and the Bureau of Automotive Repair. LETF will also collaborate with the Department of Insurance, the Attorney General and Local District Attorneys, and others in affected communities.  LETF will help ensure that workers’ rights are protected and that hard-working, compliant business owners have an opportunity for healthy competition in California.

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“The goal of LETF is to ensure fair and safe working conditions in all workplaces and promote a level playing field for employers through education and enforcement of state laws,” said Labor and Workforce Agency Secretary Marty Morgenstern. “Labor law violators endanger workers and have an unfair market advantage over law-abiding businesses. We cannot tolerate businesses that skirt the law.”

LETF’s focus on collaboration, wider information-sharing and use of new technology for enforcement will ensure more effective targeting of businesses in the underground economy.  This will help eliminate the worst violations of workers’ rights and protections. The task force will also conduct outreach and education efforts to inform businesses of their rights and responsibilities under the law.

“This effort is using state resources judiciously in a time of limited funding to allow key agencies to collaborate and direct their best efforts to fight the menace of the underground economy,” said DIR Director Christine Baker. “Legitimate businesses grow California’s economy; they are our economic backbone. It is the mission of LETF to see that those businesses are protected.”

The goals of the workforce will be to:

—  Ensure that workers receive lawful wages and are provided safe working conditions.
—  Ensure that the State receives taxes due from employers and collects penalties owed by employers who violate labor laws.
—  Level the playing field so that employers who comply with the law and support California’s economy do not have to compete with employers who break the law.
—  Eliminate the underground economy.
—  Make the most efficient use of the state’s resources in carrying out these goals.

“By joining forces with other agencies conducting inspections, we can have a greater impact on stopping labor violations and the underground economy,” said Baker. “Collaboration will also save time and money by avoiding overlapping inspections and focusing our efforts on the egregious violators.”

Businesses operating underground typically violate many laws designed to protect workers and our state’s economy. These include: not paying income taxes, unemployment insurance or disability insurance; not carrying workers’ compensation coverage; not paying proper wages; and not registering for required licenses or permits. These underground operations subsequently pay lower overhead costs which give them an unfair competitive advantage over legitimate, law-abiding businesses.

For more information on employer and employee rights and responsibilities, please visit

State To Launch Crackdown On Underground Businesses

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