Contractors See Payoff in Justice Being Served

SACRAMENTO, Calif., March 5, 2012 /PRNewswire/ -- Although it took nine years to sentence Michael Amzie Holley of Orange County-based So Cal Roofing, contractors throughout California are pleased that justice is finally being served. In late February 2012, Holley was sentenced to time in jail for multiple felony counts of insurance fraud, including failure to pay more than $500,000 in workers' compensation insurance. "It is unfortunate that it took so long to bring this criminal to justice," said California Professional Association of Specialty Contractors Executive Director Brad Diede. "It's our hope that enhanced, coordinated efforts by state agencies, such as the Department of Insurance's Labor Enforcement Task Force (LETF) and the Employment Development Department's Joint Enforcement Strike Force, will educate and force contractors to comply or put them out of business more quickly."

According to a recent media report, Holley carried only the minimum amount of workers' compensation insurance while failing to declare he was employing subcontractors, hiring unlicensed employees, falsifying state payroll reports and paying workers under the table.

"The Roofing Contractors Association of California (RCAC) is encouraged by the conviction of Holley, and we applaud the Orange County District Attorney's office for seeing this case through to a successful conclusion," said RCAC's Executive Director Marc Connerly. "Unfortunately, thistype of fraud is far too prevalent in California's roofing industry, which is why RCAC is sponsoring AB 2219. This bill will extend the mandate that all roofing contractors must carry a valid workers' compensation insurance policy and will require insurers to perform an annual in-person audit of the payroll records and place of business in order to ascertain the true size of roofing company operations."

The Construction Enforcement Coalition, comprised of employers, businesses, associations and labor groups, has been working tirelessly since its formation in 2010 to encourage state agencies to coordinate in apprehending contractors who are intentionally skirting the law and costing the state billions of dollars in unpaid payroll taxes and workers' compensation insurance. According to the Contractors State License Board (CSLB), more than 50 percent of the roofing companies in test cases conducted in three California counties were underreporting payroll, resulting in a significant loss of revenue to the state, unnecessary exposure for employees and property owners and substantially inflated insurance premiums for honest roofing companies.

"Legitimate roofing contractors should win the bids for work," said John Upshaw, Executive Director of the Independent Roofing Contractors of California. "Too often, non-compliant contractors refuse to pay unavoidable fixed costs and underbid jobs while owners, builders, general contractors and awarding authorities let them get away with it. It's clear we need to identify these bad actors much sooner, denying them access to the bid process before they get in front of legitimate contractors."

The Union Roofing Contractors Association (URCA) members support the effort to bring non-compliant contractors to justice. According to URCA's Executive Director Ron Johnston, "Roofing contractors who act unlawfully to 'con the system' fly in the face of what we stand for and must pay for their actions. We all need to unite to combat this problem of low-bidding, cheating contractors stealing work from legitimate contractors."

Another example of successful partnering between state agencies was the apprehension of Orange-County contractor Benito German Lopez Cruz by the CSLB and LETF last month. Lopez Cruz was contracting for swimming pool and plastering business without a license, paying employees in cash and not carrying workers' compensation insurance.

"Unfortunately, the swimming pool and plastering business is fraught with noncompliant contractors," said John Norwood, President, California Spa & Pool Industry Education Council. "Homeowners believing they are only paying for a pool could end up paying for much more, including the shoddy work of unlicensed contractors and, even worse, an injury to a worker on their property if the contractor is not licensed and doesn't carry workers' compensation insurance."

In 2010, CALPASC instituted the LEVEL Program to work closely with state agencies in cracking down on contractors and is a leader in the Construction Enforcement Coalition.

"We must continue advocating for efficiencies and effectiveness in enforcement," said Diede. "Through the LEVEL Program and Coalition, we will continue fighting to eliminate unfair business practices and leveling the playing field."

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Contractors See Payoff in Justice Being Served