Prevailing Wage and Underground Economy in Construction. We will continue to support similar efforts in the future to ensure that public funding of construction and development projects is funneled to projects taking a high-road position with regard to the conditions of labor. The underground economy, in which employers blatantly disregard employment laws including wage and hour regulations, is a growing problem for California's union and non-union workforce. Rogue employers are taking advantage of shifting demographic and immigration patterns to intimidate and silence workers. The underground economy impacts a wide swath of sectors of the economy, including the construction industry.
Legitimate businesses suffer a competitive disadvantage when they compete with scofflaw employers.
Underground firms put pressure on lawful employers, forcing them out of business or into the underground economy themselves. Employers fail to pay proper employment-related taxes and insurance premiums and workers lose wages, social insurance coverage and benefits, and workplace rights. The underground economy threatens to undercut many of the recent legislative victories won by labor. For the first time in California history, use of the modal rate method to determine prevailing wage rates on public works jobs became law. With AB 60, daily overtime requirements apply for the first time to persons in the construction, mining and logging industries.