Tag: small-business

Unfair Competition Demands a United Front

Don’t Just Get Mad, Get Even: Why Unfair Competition Demands a United Front

You follow the rules. You pay your premiums, file your paperwork, and play fair. You invest in your team, carry the proper licenses, and ensure your business is covered with workers’ compensation insurance. So why does it feel like you’re being punished for it? Every time you submit a bid, you know you’re not just competing on skill and efficiency; you’re up against ghost competitors who operate in the shadows, and it’s costing you jobs. You’re not imagining it, and you’re not alone in your frustration.

The Unlevel Playing Field

When a competitor submits a bid that seems impossibly low, it’s not because they have a secret business method. It’s because they’re cheating. They build their business model on breaking the law, and every legitimate contractor pays the price.

Let’s break down the “advantage” an illegal operator has. While you are paying for the essential costs of doing business legally, they are simply pocketing the difference. These costs include:

  • Workers’ Compensation Insurance: Depending on the trade, this can add a significant percentage to your payroll costs. It’s a non-negotiable expense that protects your workers and your business, yet your illegal competitor treats it as optional.
  • Payroll Taxes: You pay your share of Social Security, Medicare, and state and federal unemployment taxes for every employee. By paying “cash under the table,” an illegal operator avoids this entirely, instantly giving them a massive price advantage.
  • Licensing and Bonds: You’ve invested the time and money to get licensed by the CSLB and carry the necessary bonds, proving your professionalism and providing a layer of consumer protection. They operate with none of these safeguards.
  • Liability Insurance: You carry liability insurance to protect your clients and your assets. It’s a fundamental part of responsible business ownership that they simply ignore.

When you add it all up, an illegal competitor can have 20% to 40% lower overhead before the job even starts. They aren’t more efficient; they’re just operating illegally. This isn’t fair competition. It’s theft—theft from their workers, from the government, and directly from your bottom line.

A Powerful, Overlooked Tool

For too long, honest contractors have felt helpless, believing that reporting these operators to overwhelmed state agencies is their only recourse. But there is a powerful and direct tool designed for this exact situation: California’s Unfair Competition Law (UCL).

Found in the Business and Professions Code § 17200, the UCL is a broad statute that prohibits any “unlawful, unfair or fraudulent business act or practice.” The key word here is unlawful. When a competitor operates without a required license or fails to carry legally mandated workers’ compensation insurance, they are, by definition, committing an unlawful business act.

The UCL allows businesses that have been harmed and have lost money as a result of this illegal competition to take direct legal action. It’s not just about consumer rights; it’s about business rights. It gives you the standing to sue a competitor whose illegal shortcuts are directly taking business away from you. Think of it as a rule that says you can’t win a race by taking a shortcut that’s off-limits to every other runner. The UCL is the referee that can penalize them for it.

The Power of Alliance

So, if this powerful tool exists, why isn’t every honest contractor using it? The answer is simple: fighting alone is daunting, expensive, and time-consuming. Hiring attorneys and building a legal case against a single competitor can cost tens of thousands of dollars with no guarantee of success. For a small business, it’s a risk that’s often too great to take on.

This is precisely why the Workers’ Rights Compliance Alliance was formed.

We are a non-profit association founded on a simple principle: there is strength in numbers. Instead of one small business trying to fight a systemic problem alone, the Alliance pools resources from its members to create a dedicated legal fund. We work with legal experts to identify clear-cut cases of unfair competition and take targeted legal action on behalf of all our members.

By joining forces, we transform an impossible individual fight into a manageable and powerful collective action. Your modest membership fee combines with others to create a war chest that illegal operators cannot ignore. We handle the legal legwork, reducing your individual risk and allowing you to focus on what you do best—running your business.

Stop Feeling Helpless. Start Fighting Back.

The frustration you feel every time you lose a bid to an illegal operator is justified. But frustration alone won’t change anything. The cycle of unfair competition will continue as long as honest contractors feel isolated and powerless. It’s time to change the dynamic.

You don’t have to accept this as the cost of doing business anymore. You have the law on your side, and now, you have an alliance ready to fight with you. It’s time to level the playing field.

Visit https://workersrightscompliancealliance.com/ to learn how to join the fight. Don’t just get mad. Get even.

Hotel and Motel Establishments Under the Fair Labor Standards Act (FLSA)

Revised January 2020

This fact sheet contains general information on how the FLSA applies to employees of hotels and motels.

Characteristics

The primary function of a hotel or motel is to provide lodging facilities to the general public. In addition, most hotels or motels provide food to guests and many sell alcoholic beverages. These establishments may also earn revenue from other activities such as valet services offering cleaning and laundering of garments for guests, news stands, and renting out rooms for meetings, lectures, trade exhibits, and weddings.

Coverage

The FLSA includes two methods for applying its provisions to employees of hotels or motels. The “enterprise” basis of coverage provides that if the employer’s annual dollar volume of sales or business is $500,000 or more, whether from only a single establishment or from an enterprise with multiple establishments, and the employer has at least two employees engaged in commerce or in the production of goods for commerce or handling such goods, all employees of the enterprise are covered by the FLSA. The FLSA also provides an “individual employee” basis of coverage that applies even if the annual volume of sales or business is less than $500,000. Employees may still be covered if they individually engage in interstate commerce or produce goods for interstate commerce. Interstate commerce includes such activities as transacting business across state lines via interstate telephone calls or the U.S. Mail, ordering or receiving goods from an out-of-state supplier, or handling the accounting or bookkeeping for such activities. It would also include handling credit card transactions that involve the interstate banking and finance systems.

Requirements

Minimum Wage: Covered nonexempt workers must be paid at least the minimum wage of $7.25 per hour effective July 24, 2009. Wages are due on the regular payday for the pay period covered. Deductions from wages for items such as required uniforms are illegal if they reduce the employee’s wages below the minimum wage or cut into any overtime pay. Tips may be included as part of wages for employees who regularly receive more than $30 a month in tips. However, the employer must pay at least $2.13 an hour in direct wages to tipped employees and make sure that the amount of tips actually received by tipped employees is enough to meet the remainder of the minimum wage (or otherwise pay the difference in wages).

Overtime: Overtime must be paid at not less than one and one-half times the employee’s regular rate of pay for each hour worked in excess of 40 a week. A tipped employee’s regular rate for overtime purposes must include the amount of tip credit claimed by the employer, plus the reasonable cost or fair value of any facilities furnished to the employee as allowed by the FLSA (such as the cost of meals), and the cash wages including any commissions and certain bonuses paid by the employer.

Tips: Tipped employees are those who customarily and regularly receive more than $30 a month in tips. If the employer elects to claim a tip credit, the employer must inform employees in advance, advise them of the amount of tip credit to be claimed, and pay them at least the applicable minimum wage when wages and tips are combined. Also, employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement.

Youth Minimum Wage: Employers may pay a youth minimum wage of not less than $4.25 an hour to employees under 20 years old during the first 90 consecutive calendar days after initial employment by their employer. The law contains certain prohibitions against employers displacing any employee in order to hire someone at the youth minimum wage.

Youth Employment: The FLSA child labor regulations forbid the employment of minors under age 14 in non-agricultural jobs, restrict the hours of work and limit the occupations for 14- and 15-year olds, and forbid the employment of minors under age 18 in hazardous occupations.

Records: The FLSA requires employers to keep records of wages, hours, and other items, as specified in the record keeping regulations, 29 CFR Part 516

.

Exemptions: Section 13(a)(1) of the FLSA exempts bona fide executive, administrative, professional, and outside sales employees from the minimum wage and overtime pay requirements of the FLSA, if they meet certain tests regarding their job duties and responsibilities and are compensated “on a salary basis” at not less than stated amounts. Further information concerning these exemptions can be found in Regulations, 29 CFR Part 541

.

Typical Problems Causing Non-Compliance Include:

  • Employees placed on salary and classified as exempt without regard to the duties performed.
  • Failure to maintain records of, or pay overtime to, non-exempt salaried employees.
  • Failure to record and pay employees for all hours suffered or permitted to be worked.
  • Illegal deductions from pay for items like cash register shortages, uniforms, errors, bad checks, etc.
  • Failure to pay the correct overtime rate to tipped employees, or failure to pay the correct overtime rate that includes all service charges, commissions, bonuses and all other remuneration.
  • For employees paid with the tip credit: Tips not sufficient to make up the difference between the employer’s direct wage obligation and the minimum wage; employees receiving tips only; and sharing a portion of tipped employees’ tips with employees who are not eligible because they do not normally receive tips such as dishwashers, cooks, chefs, and janitors.
  • Paying straight time for hours worked beyond 40 per week instead of required overtime pay, or averaging the number of hours worked over two or more weeks to avoid overtime pay.
  • Failure to pay minimum wage/overtime to temporary help or employee leasing firm workers who are jointly employed by the hotel. Information concerning joint employment can be found in Regulations, 29 CFR Part 791

.