You may report them to the EDD (unemployment compensation), IRS, Calif. Franchise Tax Board and the Labor Commissioner's office (DLSE). If they are investigated, they will be asked to produce records, names/phone numbers of employees, their workers' compensation insurance info, etc. And if they are found to have violated labor laws, etc., they will be fined.
You might have a claim under Business & Professions Code Section 17200. You have standing since you suffered direct loss. And the statute concerns unfair or unlawful business competition. It appears your competitor is using a violation of the law to compete with you and steal talent. Sounds like a potential claim. There might also be a claim for intentional interference with prospective economic advantage. You should consult with a business litigator. A letter might stop them or otherwise a legal complaint may be necessary if the facts warrant it and it is truly threatening your business.