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CA Department of Insurance

Multiple state agencies combine efforts to conduct statewide underground economy sweep - many violations found

News: 2014 Press Release

For Release: August 28, 2014
Media Calls Only: 916-492-3566
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Multiple state agencies combine efforts to conduct statewide underground economy sweep - many violations found

SACRAMENTO, Calif. -The California Department of Insurance yesterday led a statewide multi-agency outreach effort, visiting more than 50 businesses to educate business owners about their obligations to comply with insurance, licensing, workplace safety and labor laws, tax codes, and regulations. Enforcement teams from five state agencies and several county district attorneys, including the Department of Industrial Relations, Contractors State License Board, Department of Insurance, Franchise Tax Board, Employment Development Department and the Board of Equalization swept across the state to visit a wide variety of businesses, such as construction, hotels, restaurants, car washes and auto repair.

"Every day the safety of workers is placed at risk, legitimate businesses are at a competitive disadvantage and the state is defrauded out of millions of dollars because dishonest businesses cheat the system by participating in the underground economy," said Insurance Commissioner Dave Jones. "As the eighth largest economy in the world, California's share of the illegal underground economy likely totals into the tens of billions of dollars and is costly to the state's economy."

The statewide effort resulted in more than 80 citations, including five serious infractions resulting in stop-work orders issued by the Department of Industrial Relations and Contractors State License Board. The Department of Insurance found 13 businesses without workers' compensation insurance and a number of businesses were referred to the Employment Development Department, State Board of Equalization, and the Franchise Tax Board due to incomplete recordkeeping. More than $135,000in fines and citations were given for a variety of violations and numerous referrals were issued for follow-up reviews for licensing, insurance, safety and tax compliance. Additional violations included unreported worker injuries, no payroll records, evidence of cash pay and unreported workplace injuries. As part of this statewide effort the teams educated all businesses visited about their responsibilities as well as provided informational materials to promote compliance.

While each allied agency participating in yesterday's sweep conducts its own enforcement and compliance investigations and audits throughout the year, departments are looking for ways to collaborate in multi-agency outreach and compliance efforts to educate more business owners and have an impact on the state's illegal underground economy.


Media Notes: Agencies participating in yesterday's operation and the media relations contact for each are listed below, so media may make direct contact for questions regarding the department's activity and findings.

  • California Department of Insurance - Nancy Kincaid (916) 599-1320 (mobile)
  • Contractors State License Board - Rick Lopes (916) 947-8828
  • Department of Industrial Relations: Cal/OSHA and the California Labor Commissioner's Office (DLSE) - Erika Monterroza (510) 286-1161
  • Employment Development Department - Loree Levy (916) 654-9029
  • Franchise Tax Board - Tami Grimes (916) 845-7940
  • Los Angeles District Attorney - Lt. Richard Aloise (213) 580-8799
  • Riverside County District Attorney - John Hall 951-955-8662 
  • State Board of Equalization - Yating Campbell (916) 327-8988
  • Taskforce for Regional Auto Theft Prevention (LA County) - Nicole Nishida (323) 267-4815
  • Ventura County District Attorney -Erin Meister 805-654-3907
  • Ventura County Regional Auto Theft Taskforce - Steve Reid (805) 477-4100
  • Photos available on the CDI Flickr page 


Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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