PENALTIES AGAINST EMPLOYERS WHO FAIL TO SECURE INSURANCE

In this State, an employer, who does not meet it’s Workers’ Compensation obligation to obtain insurance, or permissible self-insured (as it is called) is deemed to be illegally uninsured and, is likewise “willfully uninsured”.  As a result, these willfully uninsured employers will be subject to possible penalties under the Labor Code.  These penalties include:

• Prosecution for a misdemeanor punishable by imprisonment, fine of both;
• A civil suit which would include the presumption of negligence by the employer;
• A 10 percent penalty on awards for compensation, as well as possible additional 10 percent penalty (or penalties) on compensation awarded for failure to provide or a delay in providing benefits;
• A collection action by the Administrative Director on behalf of the employee and the Uninsured Employers Benefits Trust Fund;
• Orders for business stoppage and attachment of property;

Additional penalties can be even more expansive, such as:

• If the Administrative Director issues an order stopping an employer’s business operation due to their failure to have Workers’ Compensation insurance coverage, the Administrative Director is also required to issue a further penalty order requiring the employer to pay the Director $1500 per employee employed at the time the order was issued and served;
• If its determined that the employer has been uninsured for a period of more than one week during the year before that determination, the Administrative Director must require the uninsured employer to pay either twice the amount the employer would have paid in insurance premiums during the uninsured period or $1500 per employee during that period – whichever is greater; and
• When there is a final determination of a claim against an uninsured employer, the Director is required to assess a penalty against the uninsured employer of $10,000 per employee employed at the time the injury in a compensable case.

Clearly the exposure to a willfully uninsured employer is significant, as it should be.

Individuals working in any capacity, in the service of an employer, are at risk of injury (to some degree) every hour and day they work.  Those employees are entitled, by law, to the benefits and protections afforded to them under the Workers’ Compensation System.  One such protection is having the Uninsured Employer’s Benefit Trust Fund provide benefits to the injured worker in those cases where their employer is illegally uninsured.