Key Role in Halting Alleged Scam : State Bureau Monitoring Job Agencies Faces Demise
Just weeks after helping shut down an overseas job agency accused of cheating 70,000 customers, the state agency that polices the employment services industry is on the verge of being put out of business itself.
Absent an unlikely rescue in the California Senate, the tiny Bureau of Personnel Services will shut its doors Nov. 1, the victim of a deregulation campaign gone further than its sponsors expected.
Information gathered by the four-employee agency in a lengthy investigation provided much of the fodder for the Federal Trade Commission’s move last month to close Los Angeles-based Overseas Unlimited Agency, a firm authorities said collected more than $25 million from 70,000 clients but landed jobs for no more than 50.
In the wake of the firm’s shutdown, moreover, the bureau has launched a wide-ranging review of the practices of other firms offering computerized job-matching services like those provided by Overseas Unlimited, Jean M. Orr, the agency’s executive director, said Wednesday.
The fate of that inquiry--and the future, in general, of state oversight of the scandal-plagued employment services business--is clouded, though, by a partial deregulation of the industry.
Legislation effective last year freed employer-paid employment services, which generally were clear of consumer complaints, from regulation by the bureau. That left services that charge fees to job seekers, which provoked 90% of the bureau’s enforcement activities, as the only ones subject to regulation.
To the surprise of the bureau and the state Department of Consumer Affairs, the result of the partial deregulation was a 58% cut in the licensing fees--the bureau’s sole source of funding--collected when employment agency licenses came up for renewal in April, Orr said.
Since the still-regulated firms have been unwilling to absorb the fee hikes needed to maintain the bureau’s activities, state officials say they have no choice but to close the bureau.
“Basically we have a collective industry that is unwilling to shoulder the responsibility,” said Thomas M. Cecil, deputy director for legal affairs of the Department of Consumer Affairs.
Cecil acknowledged Wednesday that the worker-paid agencies still regulated by the bureau on occasion have “preyed upon people who can ill afford to be preyed upon.”
But he insisted that the state would not leave consumers unprotected when the bureau shuts its doors. Department officials will work with legislators to establish statutory standards of conduct for employment agencies and to widen customers’ legal rights to take civil action against agencies that run afoul of state law, Cecil said. Local prosecutors could get added enforcement power as well, he said.
Together, Cecil said, the provisions could be so tough that employment agencies might think twice about the wisdom of pulling the plug on the bureau.
“We have a whole arsenal of weapons in addition to a state regulatory agency,” Cecil said. “My hope is as the industry becomes aware of the choices that are looming before them, they will seriously reflect upon the pros and cons of regulatory agencies and higher fees versus a somewhat unregulated environment.”
For now, though, the choice facing state legislators is between an orderly shutdown of the bureau and limbo. The Assembly on Monday rejected, 36-38, a measure to formally shut the bureau. As early as Monday, a Senate committee could take up a technical bill that is expected to serve as the vehicle for debate over the agency’s demise.
“Nothing would displease us more than having a bureau with statutory authority to do business unable to fulfill its mandate,” Cecil said.
The bureau faces likely demise even as its concern about industry abuses is increasing. Besides its long campaign to close Overseas Unlimited, the bureau in March issued a notice of violation against another Los Angeles-based overseas jobs agency, Overseas Careers of California Agency.
As the bureau and the FTC alleged in the case of Overseas Unlimited, the notice held that Overseas Careers was matching some job-seekers with bogus job prospects.
The bureau took no action against Overseas Careers--which hired several former Overseas Unlimited employees when it opened in the fall of 1986--but has sent copies of the finding to more than 160 people who inquired about Overseas Careers, Orr said.
In the wake of the shutdown of Overseas Unlimited, Orr added, the bureau is “taking a fresh look at all computer matching agencies”--including Overseas Careers and perhaps three or four other such companies.
“They all operate the same damn way,” she said.
For fees ranging from $375 to $900, computer matching services ostensibly gather lists of job openings from employers, match job seekers with posts for which they appear to be qualified and then pass along the job-seekers’ resumes to the would-be employers.
Overseas Unlimited closed its doors last month amid accusations that many of its job listings were non-existent and that it had fraudulently led clients to believe that it would help them find jobs.
Denies Similarity
Jerry Kaplan, an attorney for Overseas Careers, objected vigorously Wednesday to Orr’s suggestion that the still-active company had engaged in similar conduct.
“What my client offers is a matching service, and they match them to real jobs that are real needs with people who have the qualifications,” he said. “That’s the big difference between this and Overseas Unlimited.”
Kaplan said the company had shown proof to Orr that its job listings were genuine and only shrank back from formally protesting the notice of violation because Orr told company officials that she would neither take action against the agency’s license nor publicize the negative finding.
He charged, too, that the bureau was raising the specter of a broad-based inquiry into the computer-matching industry in a last-gasp effort to salvage itself.
“Jean Orr is a bureaucrat who’s trying to hold onto her position,” Kaplan said. “The only way she’s going to be able to do it is with groundless accusations against this company and shoddy investigations.”
