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Consequences for Employers That Do Not Have Workers’ Comp Insurance

money and calculator next to insurance policyEvery employer in California must have workers’ compensation insurance coverage. If an employer does not have coverage, it is a criminal offense that comes with severe penalties. You also have the right to take legal action against your employer to recover the compensation you need for a workplace injury.

Below, our workers’ compensation attorneys discuss what to do if your employer does not have the necessary workers’ compensation coverage. If you have been injured at work, contact us for a free, no obligation consultation today.

Penalties for Not Having Coverage

California Labor Code Section 3700 requires that all employers in California provide workers’ compensation benefits if they have one or more employees.

Unfortunately, some employers believe workers’ compensation insurance is an option or not required. Employers who only have a single employee may believe they do not have to hold workers’ compensation insurance. Others may believe this coverage is unnecessary because employees are not in positions where injuries are likely, like an office.

There are severe penalties for companies that fail to purchase workers’ compensation insurance. California classifies this as a criminal offense – it is a misdemeanor punishable by a minimum fine of $10,000 and/or up to one year of imprisonment at the county jail.

If a judge on the Workers’ Compensation Appeals Board is reviewing a claim and finds the company does not hold workers’ compensation insurance, the employer must pay a fine of $10,000 for every employee who is on payroll if the claim is approved, or $2,000 per employee if the claim is not compensable. The maximum amount an employer would have to pay out in either of these scenarios is $100,000.

How Do You Get Compensation?

The Uninsured Employer’s Benefit Trust Fund (UEBTF) is a unit within the Division of Workers’ Compensation that could pay benefits if you are injured while working for an uninsured company.

If the UEBTF pays benefits to a worker, the unit pursues the employer for reimbursement through any available means, which may include filing a lien against the business’s property.

Stop Orders for Uninsured Employers

If a business is found to be running without required workers’ compensation insurance, the Division of Labor Standards Enforcement will issue a stop order against the business. This order bans the employer from using employee labor until it has obtained the necessary workers’ compensation policy. This means a company’s operations are essentially shut down until this requirement is met.

Failing to obey a stop order is a misdemeanor. Companies face fines up to $10,000 and/or up to 60 days’ county jail time for violating a stop order. The Division of Labor Standards Enforcement also assesses a penalty equal to the greater of two times the amount of workers’ compensation insurance premiums that would have been paid throughout the time the employer was uninsured, or $1,500 per employee employed at the company during the business’s uninsured period.

Reporting an Employer Without Coverage

If your employer does not hold the legally required workers’ compensation insurance, file a report with the nearest office of the Division of Labor Standards Enforcement office.

Contact Our Attorneys Now

If you suffered a work-related injury or illness, our Fresno workers’ compensation attorneys will fight to secure the benefits you deserve. If your employer does not have workers’ compensation coverage, we will help you pursue other legal options to access compensation for your injuries.

Request a free, no obligation consultation today and learn your legal rights. There are no upfront fees and payment is only due if we collect compensation for you.

For a free case evaluation with Berry, Smith & Bartell, a Professional Law Corporation call 1-800-848-6288 today!

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