Policing the industry

Discussion in 'Lawn Mowing' started by DFW Area Landscaper, May 5, 2004.

  1. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Messages: 2,116

    Here's a cut & paste of how the real estate industry is policing itself:

    Real-Estate Brokers Face California Labor Probe
    Source: The Sacramento Bee
    Publication date: 2004-05-04

    May 4--Tipped off that some real-estate brokers are
    shirking their responsibility, state labor officials
    warn they will soon issue a stop-work order and levy
    fines up to $100,000 against any brokerage without
    workers' compensation insurance to cover its sales

    The state Labor and Workforce Development Agency
    recently notified California's main trade group for
    residential brokerages that all brokers must secure the
    insurance by June 15. For brokers with hundreds of
    agents, the coverage can cost hundreds of thousands of
    dollars a year.

    Jose Millan, deputy secretary for enforcement at the
    state labor agency, said the warning was triggered by a
    Sacramento-area broker who provided evidence that at
    least two competing brokers were not providing workers'
    compensation coverage for agents. Millan would not name
    the reporting broker or the brokerages that appear to
    be without policies.

    But Michael Lyon, president of Lyon Real Estate,
    acknowledged he recently contacted the state because he
    was concerned that, while he's spending about $380,000
    a year on workers' compensation insurance for 750
    agents and 100 other employees, some of his competitors
    appear to be ignoring the law.

    "I sent them (the state) a letter and said, 'Why am I
    paying this when I understand other brokerages don't
    think they have to?' " Lyon said. "I needed them to
    tell me whether this is required or not."

    In the capital region there are more than 4,000 real
    estate agents and more than 1,000 brokerage firms.

    State labor officials point out that the fine for any
    broker not carrying workers' compensation insurance is
    $1,000 per agent, not to exceed $100,000 per company.
    The state will also issue the broker a stop-work order,
    meaning it can't do business in California until the
    broker shows proof of insurance.

    Though many real estate brokers consider their sales
    agents "independent contractors," labor officials
    insist state law considers agents employees for the
    purposes of workers' compensation insurance.

    In a recent bulletin urging its members to make sure
    they have the insurance, the California Association of
    Realtors stated that it has "always recommended that
    brokers carry workers' compensation insurance even
    though some older (court) cases indicate that it may
    not be necessary under some circumstances."

    State labor officials are beginning to compare a list
    of state-licensed real estate brokers to one from the
    Workers' Compensation Insurance Rating Bureau of
    California, which shows which brokers have the
    coverage. Any brokers suspected of not having the
    insurance as of June 16 will be cited, officials said.

    "If it takes having to send out 100 people (enforcement
    officers) to 100 different places, we'll do it because
    we can't afford to ignore this," Millan said. "When an
    employee is injured and the employer doesn't have
    workers' compensation insurance, the state is liable
    for the injury, so we have a fiduciary responsibility
    to taxpayers not to expose them to these risks that
    should be borne by employers."

    He added that real estate agents who had been required
    by a broker to secure their own insurance could
    potentially recoup those costs from the broker, as well
    as any costs related to injuries suffered on the job.

    DFW Area Landscaper
  2. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Messages: 2,116

    ++++"If it takes having to send out 100 people (enforcement
    officers) to 100 different places, we'll do it because
    we can't afford to ignore this," Millan said.++++

    A friend e-mailed that article to me this morning. My employee was a little late, so I called the local office of enforcement for the Texas Comptroller.

    Basically, what the enforcement lady told me was that they simply do not have enough man power to police the green industry. I asked her who polices it? She said no one, really. I said, but I've spoken with several clerks at the places where I buy my materials and over half of the landscapers are paying sales tax when they purchase their plants, fertilizers, etc. I asked if we were supposed to charge customers sales tax on the our labor to install landscaping or just on the materials. She said the entire job is taxable...landscape labor is taxable. She said they are fully aware that most of the green industry companies around here don't comply with the sales tax laws. I said, so you guys just let them get away with it? She said yes, because they don't have the man power. I explained that green industry customers aren't going to complain about not having sales tax. She agreed. I said, so if you're not policing the industry and customers aren't policing, who is? Is it up the industry to police itself? She said yes. I said, so if I send you a competitor's advertisement, who may or may not be paying the sales tax, and of course I have no way of knowing, would you investigate? She said they would make a phone call to see if they're paying sales tax. I said, so if they haven't been, do you audit all their banking records, etc? She said, no. Only if there's an audit lead. (I didn't ask her what that meant.) So I said, basically, the purpose of the phone call would not be to collect penalties, interest and back taxes, but simply to get them to start paying the sales tax going forward? She wouldn't actually answer that question, but that's what I think would happen.

    It seems the mandatory sales tax in Texas is completely voluntary. Unless you really plan to be successful. Then, I'm sure they'll find you.

    Maybe the Dallas Morning News would be interested to learn that the comptroller's office of enforcement doesn't have enough man power to enforce the laws????

    DFW Area Landscaper
  3. Tx Firefighter

    Tx Firefighter LawnSite Member
    Messages: 76

    In Texas, it depends on your gross earnings over the course of any 4 consequetive quarters throughout the year.

    The little part time guys aren't making enough money to even have to pay state tax.

    That covers probably 70% of the guys around here.
  4. dvmcmrhp52

    dvmcmrhp52 LawnSite Platinum Member
    from Pa.
    Messages: 4,205

    Sounds to me like the insurance companies are pushing this one.
  5. EZTarget

    EZTarget LawnSite Senior Member
    Messages: 295

    yea 5k a quarter i think. and i am sure there are plenty on the border that make it appear that way. heck, half of them probably don't even realize they are supposed to.

    i have often wondered about this since all quotes are always an even amount. do they round up for tax? dont think so cause every one i have seen was always the 25 or 30 quote that you so commonly get
  6. Tx Firefighter

    Tx Firefighter LawnSite Member
    Messages: 76

    EZTarget's signature:

    "'75 AMC Pacer
    21" Murray (requires Ether Prime to start)
    American Gardener YS24 24-Volt YardStick Cordless Edger
    Kitchen broom"

    I woke my daughter up I laughed so hard.
  7. EZTarget

    EZTarget LawnSite Senior Member
    Messages: 295

    ya gotta love it! i knew i couldnt compete on the high end so i figured i would go for a classic!

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