The LETF is a coalition of state and federal agencies working together to fight the underground economy through vigorous education and enforcement. Agencies involved include: Division of Labor Standards Enforcement (DLSE) for wage and hour issues; Employment Development Department (EDD) for payroll issues; Cal/OSHA for health and safety concerns; Board of Equalization (BOE) for sales tax issues; and the Bureau of Automotive Repair (BAR) for licensing requirements.
The goals of LETF include ensuring workers receive proper payment of wages and are provided a safe work environment, eliminating unfair business competition by leveling the playing field, and ensuring that the state of California receives all employment taxes, fees and penalties due from employers.
That’s a lot to cover in a two-hour meeting, and five speakers had to speak quickly to impart important information that all auto body and repair shops need to know. The five guest speakers were: Aston Ling, Cal/OSHA Senior Safety Engineer, Department of Industrial Relations, Division of Occupational Safety & Health; Mark Janatpour, Senior Deputy Labor Commissioner, Department of Industrial Relations, Division of Labor Standards Enforcement; Gene Kendall, program representative with Bureau of Automotive Repair; Claudine DeBoer, tax compliance specialist, Board of Equalization; and Justin Gill, a tax auditor with the Employment Development Department.
Formerly known as the Economic Employment Enforcement Coalition, which was founded in 2005, the LETF got a new name under the Brown Administration. The LETF focuses on “the lower paid workers, the lower socio-economic employees who tend to be more frequently abused,” said Ling. The six industries that the task force targets are: construction, agriculture, garment shops, automotive, restaurants and car washes.
Auto body shops beware: this task force could show up unannounced and issue citations for violations of any agency requirements. “When we go out to do a compliance check, we aren’t there just because,” said Janatpour. “Deputies will also ask where everything is posted. They don’t randomly choose a shop, they have done their research first.”
The Department of Industrial Relations includes the Division of Labor Standards Enforcement (DLSE) and the Bureau of Field Enforcement. Topics Janatpour covered included new legislation, minimum wage, overtime, meal periods, reporting time pay, record keeping, worker’s compensation insurance, labor codes and more.
Effective January 1, 2012, new legislation makes it illegal for willful misclassification of an individual as an independent contractor to avoid employee status. This could result in stiff penalties. Also effective January 1, employers must provide notice to employees hired after January 1, 2012 regarding rate of pay and basis of pay, including overtime. If the deduction statement does not include all required information, such as gross wages earned, total hours worked or piece rate units, the employer risks a $250 violation fine, or $1,000 fine for a second violation. In regards to record keeping, employers must also keep track of an estimator’s time, including commission or piece rate. The pay stub must also include the name of the business or entity doing business as a partnership.
Every employer must secure workers’ compensation insurance. Whether it’s your full-time employee or a family member who only fills in for a minute to answer the phone, once a person performs any task, they are considered employees under workers’ compensation laws. Family members are excluded only if they are part owners in the business. Civil penalties range from $1,500 to $10,000 per employee or twice the premium the employer would have paid for in workers’ compensation premiums during the period the employer was uninsured (whichever is higher) may be assessed for failure to secure a valid workers’ compensation insurance policy. If your business does not have workers’ compensation insurance, all employees must stop working immediately. The state will issue a stop order on any businesses that fails to provide workers’ compensation insurance and any employee affected by work stoppage shall be paid by the employer for time lost up to 10 days.
Gene Kendall with the Bureau of Automotive Repair kept his presentation short, stating that his organization is looking for a valid license posting on the wall. Fines range from $500-$5,000 for unlicensed facilities, plus the possibility of closure until the shop is licensed. The cost to renew a license is $200.
The third speaker of the evening, Aston Ling, who has been with Cal/OSHA for 18 years, stressed that shop owners should understand their rights, which include an informal conference, a pre-hearing conference and a formal appeal.
He cautioned business owners not to ignore a letter from Cal/OSHA, “or someone will show up” and labor codes say they must show up unannounced. Mostly, Cal/OSHA makes visits due to a complaint, an accident, or a programmed inspection.
He said that if a Cal/OSHA representative shows up, a shop owner should ask questions, take good notes, gather all necessary staff, cooperate and make corrections as soon as possible.
Citation fees have gone up, Ling said, because “Some people thought it was cheaper to pay the fine than fix the equipment or whatever.” Citations for regulatory problems, such as permits, posting, reporting or record keeping requirements, go up to $7,000. Those citations that are general but not of a serious nature go up to $7,000, but those that are serious offenses, where there is a realistic possibility of death or serious physical harm, go up to $25,000, or if willful, up to $70,000.
In regards to safety programs, its seems you can’t have too many. There are injury and illness prevention programs, emergency action plan/fire prevention plans, hazard communication programs, respiratory protection, hearing conservation and many others. “The plan has to be effective, it must be written and has to be implemented. Keep it simple,” Ling said. Material Safety Data Sheets (MSDS) provided by each manufacturer must be accessible to employees as well.
During a visit, Cal/OSHA will look for a first aid kit, a fire extinguisher, electrical safety, machine guarding, exposure to chemicals, flammable liquid storage, personal protection such as safety goggles and respirators, permits to operate air tanks and maintenance of spray booths. Compressed gas cylinders must be secure. The explosion of gas cylinders can be very powerful. Ling said they once found one that was a quarter of a mile away and it had gone through walls. Cal/OSHA will also look in your bathrooms. Are they sanitary? Do men and women have separate restrooms? Ling said they get a lot of restroom violations.
Cal/OSHA is not just here to bust you. They offer a free service, a no-cost consultation, to review your safety programs, give you free sample programs, and walk around your shop and assist with any issues. Ling assured shop owners that Cal/OSHA does not use its free service to issue citations for penalties. “We are there to help identify issues,” he said. The free service is already paid for by tax dollars, it’s confidential, no penalties or citations will be made, and the information will not be shared with the enforcement side of the agency. To schedule a free consultation, call (800) 963-9424.
The fourth speaker, Claudine DeBoer, is a tax compliance specialist with the Board of Equalization. She reviewed the mission of BOE, which is to serve the public through fair, effective and efficient tax administration. The goals of BOE includes improving the taxpayers experience and maximizing voluntary compliance. In 2008, the BOE implemented a program called SCOP - Statewide Compliance and Outreach Program.
The main purpose of SCOP (pronounced “Scoop”) is to educate business owners on their tax responsibilities, advise business owners when they need a seller’s permit, explain to business owners how to report and remit their taxes and fees due, and review business operations compared to sales and filed use tax returns. There are seven SCOP teams statewide that conduct door-to-door visits by zip code. The SCOP teams are located in Oakland, Sacramento, San Jose, Van Nuys, Norwalk, Irvine and Riverside. SCOP intends to visit every non-residential business location statewide over time. The teams do not visit home-based businesses, DeBoer said. During visits, SCOP staff will check for a seller’s permit and other required fee permits and licenses and determine if the business is reporting its sales and use taxes properly.
In the San Diego area, DeBoer reported that SCOP-LETF statistics in the automotive industry (from January 1-May, 31 2012) showed that out of 98 inspections, nine businesses were operating without a seller’s permit, 20 shops were operating without a city or county business license and 17 businesses needed a registration update, mostly due to a change in ownership. For more information about SCOP, see www.boe.ca.gov/sutax/SCOPOverview.
The new BOE office in San Diego is located at 15015 Avenue of Science, Ste. #200, CA 92128 and the phone number is 858-385-4700.
The last speaker of the night was Justin Gill, a tax auditor with EDD. This department collects and distributes unemployment and disability benefits and monitors payroll tax deductions. As part of the LETF, he explained worker classifications, employer responsibilities, and gave an overview on state payroll taxes and forms.
He said you are an employer if total wages paid to one or more employees are in excess of $100 in a calendar quarter period. All casual labor is employment, whether workers are hired for an hour, a day, a week or on a part-time basis. Correctly classifying workers is very important, as incorrectly identifying independent contractors could result in fines up to $50,000, he said. An information sheet for the automotive repair industry, called form DE 231B, is available on the EDD website.
Federal and state laws require that employers post complete, up-to-date versions of labor notices. Current posting requirements are available at www.taxes.ca.gov/payroll_tax/postingreqbus.shtml.
Gill stressed that really clean payroll recordkeeping makes things so much easier, and although it’s a good idea to retain records and returns for at least four years, with digital scanning, he says there’s no reason not to keep records indefinitely. For payroll tax seminars and workshops, see www.edd.c.gov/taxsem.