A recent article from the Los Angeles Times makes the futile effort of communicating hope to legitimate businesses still in California regarding the government’s intentions towards illegal activity.

“State officials” are apparently promising to crack down on employers who pay their employees in cash to avoid “payroll taxes, workers’ compensation insurance and other government mandates.”  Christine Baker, Acting (at least until the California State Senate approves her appointment) Director of the Department of Industrial Relations (you can watch the two-hour long hearing here), testified that her department is using software to try to catch cheats.

The article has quotes from legitimate businessmen, who naturally and reasonably complain of the lack of a level playing field – they compete with businesses who avoid many of the costs that should equally fall on all industry participants, and then those illegal practices are reflected in lower costs than those offered by honest businesses.

Despite being your loyal blogger and a workers’ compensation defense attorney, I still enjoy my rights as a citizen, so I ask this question of our government – do you not see the writing on the wall?

We have employer after employer leaving the state, and then employer after employer going underground (to the tune of $7 billion lost annually in tax revenue).  Does that not tell you that employers are overburdened with payroll taxes, government mandates, and especially workers’ compensation costs?

Workers’ compensation simply costs too much – it costs too much to fight the frivolous claims made by many applicants and their attorneys, it costs too much to deal with prescription-heavy and scruple free medical lien-claimants, it costs too much to appeal the applicant-friendly and law-hostile rulings made by many of the Workers’ Compensation Judges, and it costs too much to pay the hyper-generous benefits applicants enjoy in this state.

Of course law-breaking should be prevented and deterred, but must the law make law-breaking so lucrative for employers?

There is a solution to this underground economy, and it doesn’t have to be driving business out of California.  The legislature needs to understand the burdens they pile onto the employers in California and fix this before it is too late.