The first presenter was Mark Janatpour who made it known quickly that this task force could be a team of enforcers from all of the above agencies. They could swoop down on a shop, unannounced, and issue citations for violations of any requirements pertaining to any of these agencies. You could feel like the infantry, the artillery and air force, were attacking you all at once. If the hand grenades or mortar fire didn’t get you, a bomb would. The next two hours were a litany of possible violations and citations that go as high as $20,000 or more. Janatpour pointed out that their agencies have new enforcement weapons like data sharing. A report to one agency that was missing or inconsistent with a report to another agency could now trigger an investigation, and a complaint to one agency that might be relevant to another agency could also trigger an investigation. Data sharing opens an entirely new Pandora’s box of enforcement possibilities.
Janatpour opened with a summary of new legislation. For example, now misclassifying an employee as an independent contractor can result in serious penalties, a public notice and possibly a revocation of a shop’s license to operate. Another rule makes any advisor, like an attorney or accountant, who advises the misclassification, jointly liable. This topic was greatly enlarged upon by Tracey York who covered in great detail who qualifies as an independent contractor and also when family members are exempt and when they are not.
Freeman Baldwin, Bureau of Automotive Repair representative, had the least to say but pointed up the requirements that we’re all familiar with. An unlicensed shop faces a penalty of up to $5000 and closure until being licensed. The most frequent violation is an inaccurate BAR license. Freeman suggests regularly checking to get updated on new regulations, keeping invoices and quality assurance in compliance with regulations, and possibly even participating in their “Education First” program.
Aston Ling, Cal/OSHA Senior Safety Engineer, presented an in-depth look at the many potential violations and citations a shop might face when inspected. If a shop owner has any doubt about his or her shop’s compliance, a no-cost consultation is available by calling 800-963-9424. Aston says the best way to avoid violations is to have a good comprehensive safety program for employees. New legislation redefines hazards so that if there is a “realistic possibility of death or bodily harm,” it could be a serious violation with penalties up to $25,000 and, if willful, up to $70,000. A shop does have a right to an informal conference, a pre-hearing conference, and a formal appeal up to 15 days after a citation. After the 15 days, all bets are off!
The next presenter was Nicole Zouein, Board of Equalization (BOE) Compliance and Outreach Lead. Nicole has been a BOE auditor for 14 years, but the last three years she’s been assigned to SCOP, the “Statewide Compliance and Outreach Program.” As part of this program SCOP specialists will go door-to-door visiting businesses to make sure they have the state tax and fee permits and licenses displayed that they need to operate. They also make certain state records are updated and correct. Unregistered businesses are given an opportunity to register within one week, but if there has been an obvious intent to evade taxes the owner might be issued a misdemeanor citation.
The last presenter was Tracey York, California Employment Development Department (EDD) Joint Enforcement Agent. This department collects and distributes unemployment and disability benefits and monitors payroll tax deductions. A major focus of enforcement is combating the underground economy and any failure to correctly pay state taxes and Workers’ Compensation. As noted earlier, a key focus is identifying any misclassification of an employee as an independent contractor. While the IRS requires only three elements to classify an independent contractor, the State of California considers eleven factors. Information sheet DE 2318 Rev. 3, passed out at the meeting and available from the EDD, specifies these factors as they apply to the automotive industry. Penalties for misclassifying go back three years and can require paying all unpaid wages, back taxes, workers’ compensation and other unpaid payroll deductions. Also the potential for “data sharing” with other agencies could result in additional astronomical penalties. As Tracey says, “It’s definitely not worth it.”