In case you missed it, the California statute popularly known as the Car Wash Worker Law was just extended another four years. This means that carwash and detailing businesses that are not registered with the state labor commissioner’s office risk thousands of dollars in fines and are subject to being shut down.
The law is designed to provide safeguards to carwash workers by requiring businesses to carry workers’ compensation insurance, maintain a safe work environment and keep payroll documentation on employee wages and hours worked. The law also requires businesses to register with the state and post a wage surety bond.
Although this affects only businesses in the Golden State, it is important for carwash businesses to keep an eye out West because what often starts in California has a way of trickling toward the East Coast. Even without state registration requirements, if you are not carrying workers’ compensation, you are doing your employees and your business a great disservice and unnecessarily putting your company at risk.
As a former full-service carwash owner who now is on the insurance side of the equation, I can tell you that avoiding a $300 registration fee is not worth the gamble of a $10,000 fine, not to mention lost income while your carwash or detail shop is closed until compliance is met. Carwash businesses that do not comply with the Car Wash Worker Law do more to sharpen the regulatory focus on the industry than combat it.
In reality, California carwash businesses should feel fortunate that the latest extension of the Car Wash Worker Law was only four years. The bill introduced this year (AB 236) sought to make the law permanent, but the state senate amended the bill before passing it. While the law is extended to Jan. 1, 2014, this marks the second four-year extension since the original bill (AB 1688) went into law on Jan. 1, 2004.
Clearly, legislators see value and reason in renewing the law. And why not? In 2007 and 2008, more than $10.6 million in labor fines were issued to California carwash owners, with nearly $6 million coming from citations for failing to register with the state. As recently as October, the California labor commissioner’s office issued more than $900,000 in fines to 103 carwash and detailing businesses during a statewide enforcement sweep. Of those cited, 76 were for failure to register, totaling more than $600,000 in fines.
The good news is the annual number of carwashes in violation has decreased. In 2007, California carwash operations were fined more than $6.8 million, but total fines in 2008 fell to around $3.8 million. Labor officials conducted 576 carwash inspections statewide in 2008, issuing 519 citations. Of those, 274 were for registration infractions. By comparison, the state issued 732 citations in 2007, with 408 being registration citations.
Registration fines accounted for 55 percent of the total penalties assessed in 2007 and 58 percent in 2008. Overall, though, the dollar amount for registration fines fell 41 percent between 2007 and 2008, nearly mirroring the 44 percent drop in total fines assessed during the same two-year period.
The bad news is although fines have decreased, there are still owners being cited. Why?
Compliance
If you don’t think the Car Wash Worker Law applies to you, think again. Plain and simple, section 2051 of the labor code reads: “‘Car Washing and Polishing’ means Washing, Cleaning, Drying, Polishing, Detailing, Servicing or otherwise providing cosmetic care to vehicles; ‘Car Washing and Polishing’ does not include motor vehicle repair, as defined in Section 9880.1 of the Business and Professional code.”
Carwash owners are best served by protecting their businesses through registration. Registration is straightforward, although there are different requirements depending on whether you are a corporation, limited liability company, etc. In addition, if you lease your employees through an employee leasing company, there is a section covering this as well.
To register your carwash with the state of California you must complete and submit several items, including an Application Form DLSE 666, a valid workers’ compensation insurance certificate, a fictitious business name statement, copies of your state and federal employer identification numbers, and proof of compliance with local government’s business license or regional regulatory requirements.
If you are a corporation, you must submit copies of your Articles of Corporation and Statement of Information by a Domestic Stock Corporation. Limited liability companies must submit a copy of their Articles of Incorporations.
Businesses that contract employees through a leasing company must also submit a sample contract and the 24-hour cancellation notice. The employee leasing company must be registered with the labor commissioner as an employer engaged in the business of carwashing and polishing. In addition, you must submit a signed