Joint Enforcement Strike Force: Combating the Underground Economy

The Joint Enforcement Strike Force (JESF) is a partnership of California enforcement agencies that work with local and federal agencies to combat the underground economy to promote a level playing field for California businesses.

The JESF’s Legal Authority

The JESF’s authority was set up under section 329 of the California Unemployment Insurance Code (CUIC) to combat the underground economy by combining resources and sharing data among the state agencies that enforce tax, labor, and licensing laws.

The Employment Development Department (EDD) is the designated lead agency of the JESF, and the EDD Director or designee serves as its chair. The JESF members include, but are not limited to:

The Underground Economy

The term underground economy means different things to different people. Generally, it includes any activities that people and businesses try to hide from government licensing, regulatory, tax, and law enforcement agencies. Business owners who cut corners by not paying taxes, not providing enough insurance, and taking from their employees’ paychecks are part of the underground economy. For more information, visit Underground Economy Operations.

California’s well-being depends on the success of its businesses. To succeed, businesses need to compete on a level playing field. California has many rules and regulations that its businesses must follow, and when some business owners do not play by those rules, they have an unfair advantage.

The California Little Hoover Commission’s March 2015 report states the following:

The underground economy robs the state of an estimated $8.5 billion to $10 billion in uncollected tax revenue, money that could fund education, law enforcement or long-overdue infrastructure investments or reduce taxes for the majority of Californians who play by the rules.

When business owners cheat by illegally underpaying employees, for example, or not paying taxes, it hurts both compliant businesses and California workers. Employees working within this illegal business model often feel the greatest harm. Employers may short their paychecks or intentionally misclassify them as independent contractors, making them pay the employer’s share of payroll taxes.

JESF Information

The JESF’s goals are to help improve economic stability, working conditions, and consumer and worker protections in the state. Specifically, the JESF works to:

  • End unfair business competition.
  • Protect workers by making sure that they get all compensation, benefits, and worker protections they are entitled to by law relating to their employment.
  • Protect consumers by making sure that all businesses are properly licensed and that they follow the state’s consumer protection regulations.
  • Reduce the burden on law-abiding citizens and businesses by making sure that all follow the state’s licensing, regulatory, and tax laws.
  • Reduce the tax gap by increasing voluntary compliance with the state’s tax laws to maximize the state’s General and Special Funds.

JESF Reports

Each year by June 30th, the JESF prepares an annual report for the Governor and Legislature on their activities and accomplishments. The latest report is available to view in PDF.

Additional Resources