California Labor Law: Jerry Brown Gets Tough on Rogue Companies that Don't Pay

Sacramento, CAIn California, state Attorney General Jerry Brown has signaled a harsher stance on employers exploiting workers in contravention to California Labor Laws, by launching a lawsuit against Brinas Corp. on November 1st.

The lawsuit alleges that the Colorado-based contractor underpaid employees, failed to pay taxes and the required workers' compensation premiums, as well as allowing an unsafe workplace. The resulting savings to the company, by maintaining these alleged unfair practices, could result in recovered monies paid to workers that is rightfully theirs.

Brinas Corp. had worked on numerous condominium and apartment complex projects throughout Los Angeles and San Diego counties. Brown cites the Brinas case as a classic example of the underground economy that exists in California, plied by employers who primarily rely upon low-wage earners. By dealing mostly in cash, these companies can easily skirt around state tax liability and other laws and regulations, while conducting business activity that in every other sense is perfectly legal. However, the fewer pieces of paper there are on the paper trail, the easier it is for unsavory employers to exploit their workers, escape paying state taxes and adhere to state regulations.

This so-called underground economy, as Attorney General Brown calls it, represents on average as much as $100 billion to the state of California's overall gross domestic product. In specific terms, a UCLA study concluded in 2004 that California's underground economy translated into anywhere from $60 billion, to as high as $140 billion.

Nor does this have anything to do with outright criminal activity. Rather, here are legitimate companies working on legitimate projects that are legal and conform to protocol in almost every respect, but drift over to the dark side when it comes to their workforce, and declaring other tax and regulatory liabilities.

The concern is that not only do these dishonest companies exploit their workers, they also provide unfair competition for local and state companies that play by the rules and keep everything on the up-and-up.

Attorney General Brown has been busy since taking office last January. Assembling a task force of state attorneys and investigators, the Brinas lawsuit represents the first tangible results of work conducted by this newly formed unit over the past several months.

Brown says this is, indeed a beginning, and there will be more companies brought to answer for failure to pay minimum wage, overtime, payroll taxes or worker's compensation premiums.

The suit against Brinas, a drywall installation contractor, was filed on Halloween. Business and labor groups applauded the news. The action seeks financial penalties that could represent hundreds of thousands of dollars, under California's Unfair Competition Law.