Uninsured Employers In California Face Legal And Financial Consequences

California law requires virtually all employers in our state to purchase workers’ compensation insurance. This is beneficial to both employees and employers. Naturally, workers benefit from being able to file claims for workers’ compensation when they have sustained losses (such as medical bills and lost wages) as a result of being injured in the workplace. Additionally, employers can actually save themselves quite a bit of money in the long run by purchasing sufficient workers’ compensation insurance.

Some employers don’t realize this. They may choose to self-insure. They assume that handling workers’ compensation claims directly whenever such cases arise is less expensive than purchasing insurance through a carrier.

Don’t make this mistake. The potential consequences you can face if you don’t have proper workers’ compensation insurance are numerous and significant. They include the following:

Lawsuits

Again, the legal requirement that employers in California purchase workers’ compensation insurance is one that is advantageous to workers and company owners. Typically, if an employee files a claim to recover workers’ compensation benefits, they are essentially agreeing they no longer have the right to file a separate claim or lawsuit against their employer.

When an employer has not purchased workers’ compensation insurance, though, employees can file civil suits against employers after being injured in workplace accidents or developing health conditions as a result of being exposed to hazards in the workplace.

You may need to hire a lawyer if an employee takes legal action against you. There’s also no guarantee you will win your case. If you lose, and you must pay an employee what they are asking for, your company will suffer unexpected financial losses that can theoretically put you out of business.

This doesn’t need to happen. Such an outcome can be avoided if you purchase workers’ compensation insurance rather than trying to self-insure.

Fines

The financial losses your company may sustain if an employee files a claim or lawsuit against you will be exacerbated if you incur fines. This is a genuine possibility when an employer has failed to purchase workers’ compensation insurance in California.

Uninsured employers can be fined up to $10,000 in our state. This is another reason buying workers’ compensation insurance is key to saving money.

Incarceration

Along with being fined, uninsured employers in California can face sentences of up to a year in jail time. It is highly unlikely your company will recover if you spend a year incarcerated. When you are released, you may also find it difficult to start a new venture, as partners and investors may not be eager to work with someone who was jailed for not complying with California labor laws.

All that said, if you are facing legal consequences as an uninsured employer in California, hiring the right legal team can play a major role in helping you avoid a lengthy jail sentence and hefty fines. Our team of Los Angeles uninsured employer defense attorneys at Sacks Law Group, APC is prepared to assist you in navigating these intimidating circumstances. Learn more by contacting us online or calling us at 310-216-7778.