Consequences of not having workers’ comp insurance
Workers’ compensation benefits are the exclusive remedy available to employees who suffer work-related injuries or illnesses against properly insured employers
The San Diego District Attorney’s Office placed a quarter-page ad in The San Diego Union-Tribune on March 22. Underneath the photo of a chef was a smaller, menacing image of a flaming grill. In large text, the ad read: “DOES YOUR EMPLOYER HAVE WORKERS’ COMP? IT’S THE LAW!” The reader was directed for further information to the toll-free number of the DA’s insurance fraud hotline and the DA’s website.
Labor Code section 3700 requires virtually every private sector employer with one or more employees, including employees who are family members, to carry workers’ compensation insurance issued by an insurer authorized to write compensation insurance in California. There is a narrow exception for employers certified by the Department of Industrial Relations to be self-insured.
Scope of the problem
DA Communications Director Tanya Sierra said the number of unlawfully uninsured California employers is probably unknowable “since new businesses start and existing businesses close all the time.”
Nicki Demakis, managing partner of San Diego-based workers’ compensation defense firm Trovillion, Inveiss, Demakis & Hansen said by email that two categories of California employers are more likely than others to be uninsured. The first category is such trades as “handypersons, roofing and small construction outfits” that may misclassify their workers as independent contractors to avoid having to secure workers’ compensation insurance. The heightened risk of injury from work in these industries results in higher premiums many firms cannot afford.
The second area of widespread noncompliance, said Demakis, relates to “domestic workers/household employees. Most homeowners don’t realize they could be classified as ‘employers’ under California law dependent upon the hours worked and pay threshold being met of folks they have working for them. Common examples of these would be nannies, caregivers and housekeepers.” Homeowners employing such individuals should“contact their broker and ask for a domestic worker endorsement” to their homeowners’ insurance policy.
Fines, prison for noncompliance
Labor Code section 3700.5 makes it a misdemeanor to fail to carry workers’ compensation insurance “by one who knew or because of his or her knowledge or experience” reasonably should have known of the obligation to carry insurance, subjecting the offender to a fine of at least $10,000, up to one year in county jail, or both.
Click here to read the full article written by SCMV Shareholder Dan Eaton and published in The San Diego Union-Tribune.