Two area contractors snared in Workers' Comp probe

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(CNS) – Two Los Angeles County contractors will undergo tax audits as a result of a statewide sweep targeting contractors for allegedly under-reporting payrolls to avoid paying higher workers’ compensation insurance and taxes, state officials announced today.

The Contractors State License Board, Department of Insurance and Employment Development Department jointly conducted “Operation Underground” on June 20-21 to check for possible “off the books” activity by 133 contractors, resulting in 104 citations and stop orders, according to the CSLB.

One contractor in Inglewood and another in Santa Clarita were among those targeted, and both will have their taxes audited, CSLB officials said.

CSLB spokeswoman Venus Stromberg told City News Service that it may take up to a year to complete  investigations arising from the two-day sweep. Misdemeanor or felony charges could be filed against some of the contractors targeted across the state, depending on the level of wrongdoing uncovered, she said, adding that, in the meantime, none of the contractors can be identified.

Contractors in 11 counties were cited during Operation Underground.  “Participants in the state’s underground economy are harmful to everyone,” said CSLB Registrar Steve Sands. “Anyone who neglects their responsibility to comply with state contracting, insurance and payroll requirements drives up premiums. At the same time, legitimate licensed contractors struggle because illegal operators underbid them.”

Officials reminded people planning to hire a contractor for residential or commercial work to keep the following in mind:

– any contracting job valued at more than $500 requires a license;
— unlicensed contractors can perform work that’s less than $500, but they must disclose that they’re not licensed in ads, according to state law;
— before anyone hires a contractor, they should verify the person’s license via the CSLB’s website,;
— obtain at least three bids; and
— never pay more than 10 percent of the total estimated cost of a job in advance, or $1,000, whichever is less.

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