Running a business is expensive. There are all kinds of costs that must be paid whether or not there is any money coming in the door. Many times it may be tempting to try and save a bit here and there and perhaps cut out certain expenses that don’t seem immediately necessary. If you are an employer, one of those expenses that you might find hard to justify is the payment of workers’ compensation insurance premiums. This might be especially true if you operate a business where everyone sits at desks and doesn’t handle any sharp objects or heavy equipment. However, the law in California makes it quite clear that the risk of danger to your employees has little to do with the need to have workers’ comp insurance – though it may affect your premiums.
At Sacks Law Group, APC, we understand the need to be efficient with finances when running a business. Our Los Angeles uninsured employer defense attorneys also know how devastating it can be for a business owner when an injured employee makes a claim against an uninsured business.
Uninsured Employers That Get Caught Will Pay More (and May Go to Jail)
California law requires all employers to have workers’ compensation insurance. An employer who does not have the required insurance can be penalized under two separate provisions of the Labor Code. If an employer knew or should have known about the requirement to carry workers’ compensation insurance, not having the insurance is a criminal misdemeanor punishable by
- Up to 1 year in jail or
- A fine of at least $10,000 or
- Both jail and a fine
Meanwhile, the state labor commissioner can order the employer’s business to stop using employees until the insurance coverage is obtained. If the coverage has been missing for more than one week, an employer will be ordered to pay the greater of
- Twice the insurance premium that should have been paid or
- $1,500 per employee
The money paid by the employer goes into the state Uninsured Employers Fund which is used to pay the workers’ compensation claims of injured workers when an uninsured employer does not pay.
Uninsured Employers Pay Even More if an Employee Makes an Injury Claim
Workers’ compensation insurance compensates employees for work-related injuries without regard to finding any fault for the cause of the injury. California workers’ compensation laws give most employers ‘immunity’ from employee lawsuits in all but a few specified circumstances.
One of the circumstances that allow an employee to sue an employer for a work-related injury is that the employer has failed to carry workers’ compensation insurance. Now an employer may face both a workers’ comp claim and a lawsuit. An employee can potentially recover more with a lawsuit because damages like pain & suffering are recoverable with a lawsuit but not from a workers’ compensation claim.
If an injured employee files a claim with the Workers’ Compensation Appeals Board – which reconsiders employee benefit claims that have been denied – the appeals board can impose a fine against an uninsured employer – even if an employee’s claim is ultimately denied. Once a final determination has been reached the appeals board can fine the uninsured employer
- $2,000 per employee – if the employee does not receive compensation
- $10,000 per employee – if the employee does receive compensation
Employers who don’t have workers’ compensation insurance can get themselves into a lot of trouble with the state and could end up having to shut down their businesses and experience financial ruin. At Sacks Law Group, APC, we don’t want to see that happen. Our Los Angeles uninsured employer defense lawyers counsel uninsured employers on how to minimize the impact of the criminal and civil penalties they may be facing. If you are an employer facing liability for being uninsured we can help. Contact us here to schedule a consultation or call our office at 310-216-7778.
Recent Blogs
Workers’ compensation claims are designed to support employees injured on the job. However, fraudulent claims can undermine this system, driving up costs for businesses and hurting employees with legitimate needs.…
Facing a workers’ compensation claim as an uninsured employer can be overwhelming. California has strict laws requiring employers to carry workers’ compensation insurance, and failing to comply can lead to…
Workers’ compensation insurance typically covers the costs when an employee is injured on the job. However, when a third party is responsible for the injury, employers in California have the…