Can I Opt Out of Workers’ Compensation Insurance?

Employers know that they need to take precautions to make sure their business is adequately protected.  Employers need to carry a variety of types of insurance, ranging from fire insurance to insurance on any vehicles.  Workers’ compensation insurance is another important component to protect your business.  Workers’ compensation provides insurance coverage in the event that your employee sustains a work related injury.  Despite its protections, some employers find the cost of workers’ compensation insurance too heavy a price to pay for that protection.  This leads many employers to wonder whether they can opt out of carrying workers’ compensation insurance.

California labor code section 3700 provides that if a business employs one or more employees, that business is required to carry workers’ compensation insurance.  It is important to note that this requirement includes some workers that you would not ordinarily believe would fall under this requirement, such as nannies or handymen.    It also should be noted that due to recent changes in the law, executive officers and directors of corporations must also be included in workers’ compensation coverage unless the corporation is completely owned by the directors and officers.  In that circumstance, they can opt to be excluded from coverage.  Except for those circumstances, all employers are required to carry workers’ compensation insurance and can face hefty penalties for failure to comply.

In some cases, an employer may decide to self-insure.  Self-insurance requires that you receive state approval.  The business must have a net worth of at least five million dollars with a net annual income of at least five hundred thousand dollars.  The employer must also post a security deposit.  Although this generally means that only larger businesses are able to meet the requirements, some small employers in the same homogeneous industry pool their workers’ compensation liabilities.  If the employer is self-insured, workers’ compensation claims may be administered directly by the employer or the employer may contact with a third party administrator to handle the administration of the case.

If you have questions about whether your business is required to carry workers’ compensation insurance, contact us today.  We can talk to you about your rights and responsibilities.

Medical Fraud and Workers’ Compensation

Workers’ compensation exists to make sure that employees receive the appropriate compensation and medical care in the event they sustain a work related injury.  In the vast majority of cases, workers’ compensation claims are valid and the injured employee really does require medical care.  In some unfortunate cases, however, there may be medical fraud in workers’ compensation cases.

Medical fraud in workers’ compensation cases comes in many different forms.  One common form is when a worker either exaggerates or completely fabricates an injury.  An employee may state that he or she still needs medical care and accommodations at work even though he or she is actually no longer injured.  This is commonly known as “malingering.”  If an employee fabricates or exaggerates an injury to continue to receive benefits, the employee can be charged with insurance fraud, ordered to pay back the fraudulently received funds and even serve time in jail.  Common injuries that are seen with this type of fraud are soft tissue injuries, as there are no medical tests to determine whether the injury has sufficiently healed and the employee is the only one who can say whether there is still pain or limitations because of the injury.

There are also much more complicated types of medical fraud.  These are typically white collar crimes that may involve multiple layers of fraud and multiple offenders.  These types of schemes may include doctors and attorneys who encourage others to exaggerate their injuries.  Doctors may over treat the patient to continue receiving payment for services and may over prescribe drugs, including harmful and addictive substances like powerful opioids.  Doctors receive payments for unnecessary treatment and the cost of insurance companies, and that cost is ultimately passed on to tax payers and others who must purchase workers’ compensation insurance.

In recent years, the state of California has made significant efforts to identify and prosecute workers’ compensation fraud, including medical fraud.  During the 2015-16 fiscal year alone, 167 cases were referred to prosecutors by the fraud division, totaling a potential loss of almost two hundred million dollars.  In addition, during that same time period, district attorneys reported 731 arrests.  Restitution of over fifteen million dollars was ordered in connection with the successful convictions.

If you have questions about workers’ compensation fraud, contact us today.  We can talk with you about fraud concerns and how you can comply with the law.

Third-Party Claims

California’s workers’ compensation system is a “no fault” system.  This means that in order to recover wages and medical costs under a workers’ compensation claim, an employee is not required to prove that his or her injury is a result of the employer’s intentional or negligent conduct.  In the majority of workers’ compensation cases, there are only two parties to the case: the injured worker and the employer together with the workers’ compensation insurance provider.  However, in some cases, there will be a third party involved.  There are some cases where the employee’s injury is a result of not simple common work place conditions, but because of the negligent or intentional conduct of a third person.  Common examples include faulty equipment or a car accident caused by the negligence of the other driver.  In both of those cases, as long as the worker is acting in the course and scope of employment, the injury would be compensable under the workers’ compensation system.  However, the inquiry does not end there.  Instead, the employer and often the insurance company will bring an action against the third party to recover the costs for wages and medical benefits that had to be paid out to the injured employee as a result of the third party’s conduct.  It is important to note, however, that the case against the third party is a separate action from the workers’ compensation case.  The workers’ compensation case between the employee and the employer proceeds like normal through the typical workers’ compensation system.  The claim against the third party, however, will go through civil court just like any other tort case.  It is not uncommon for the employer to need two different attorneys, as one would be familiar with workers’ compensation while the other will be an attorney who focuses on tort cases.  Particularly when the third party claim includes a product liability case (such as where equipment is faulty), it is likely an employer will need to hire another attorney for that, as it is a specialized area of law that not all attorneys practice or are familiar with.

We have extensive experience helping our clients understand third party claims in workers’ compensation cases.  Call us today to talk about your case.

Repetitive Motion Injuries – What Is My Business Liable For?

There are a wide variety of injuries that can occur in a work place.  An employee can fall off scaffolding, get in a car accident while driving to deliver a shipment, or receive an injury from malfunctioning equipment.  Repetitive motion injuries are also a common source of work related injuries.  The most common type of repetitive stress injury is carpal tunnel syndrome.  Carpal tunnel syndrome occurs when the nerves running from the hand to the wrist are compressed through repeated motions, like typing.  There are other types of repetitive stress injuries, which could come from repeated bending or repeated use of one body part, such as repeatedly lifting your arms over your head.  Like other work related injuries, an employer can still be liable for repetitive motion injuries.

If your employee has a repetitive motion injury or shows signs of developing the injury, you need to treat the repetitive stress injury just as you would any other injury.  The employee needs to seek medical attention.  You will need to complete the same paperwork and submit it to your workers’ compensation insurance provider.  The employee will be eligible to receive replacement income, payment of medical expenses, and if necessary, reasonable accommodations when the worker is able to come back to work.

One issue that frequently arises with these types of injuries is that the worker was likely typing a lot or during similar repetitive actions in previous employment.  Employers will often wonder whether they are obligated to cover the repetitive stress injury if the condition started to develop during prior work.  Whether the injury is covered by the workers’ compensation system will be dependent on whether the injury is a pre-existing condition.  For example, if the injury was diagnosed and treated before the worker started with your business, it may very well be excluded from coverage under workers’ compensation.  However, if the pre-existing condition is one that he or she previously received workers’ compensation benefits for and the condition is aggravated by the work with your business, then the employee may very well be eligible for additional workers’ compensation benefits.  The employee will need to get a medical examination to determine whether it is part of a pre-existing condition or a new injury.

We have extensive experience helping our clients understand the workers’ compensation system.  Call us today to talk about what we can do to help you

Beware of Incorrect Worker Classification

Employers know that there are many administrative responsibilities they must give special attention to.  This includes such issues as paying taxes, making sure you comply with any local ordinances, and keeping your inventory up to date, just to name a few.  Employers are also free to determine how they want to accomplish their work.  Employers can hire employees to work directly for their business.  Alternatively, they can retain the services of an independent contractor.  It is essential that employers properly classify their workers.

Under the California workers’ compensations system, an employer is required to provide workers’ compensation insurance for all employees.  The failure to provide the required insurance can result in hefty civil penalties and in some cases, even criminal charges.  However, an employer is not required to provide workers’ compensation insurance for independent contractors.  To that end, many employers end up classifying all of their workers as independent contractors to try to get out of providing insurance and benefits.  Like the failure to provide insurance coverage at all, the misclassification of workers as independent contractors can carry heavy repercussions.  If it is discovered that a worker is misclassified, California law provides that an employer may have to go back and pay unpaid payroll taxes that were avoided because of the misclassification. California law also provides for civil penalties starting at $5,000 for each misclassification and go up from there.  Moreover, the misclassified worker can seek up to three years of back wages, including unpaid overtime.

It is clear that employers need to be diligent in their proper classification.  However, there is not exactly a set definition of “independent contractor” versus “employee,” although employee is defined in labor code section 3351. That said, there are several issues the court will examine when trying to decide whether a worker is an independent contractor.  One of the most important issues is what type of control the worker has on how his or her work is completed.  For example, if the employer sets specific times when the worker must do the work as well as a particular place, that indicates the worker is actually an employee.  Another indication is if the employer provides the tools and equipment necessary to complete the work, the worker may actually be an employee and not an independent contractor.

We have experience assisting our clients understand worker classification.  Contact us today to talk about your business and what we can do to help make sure you are in full compliance with the law

Why Do We Have Workers’ Compensation?

Conscientious employers take many measures to make sure that their employees are safe in the work place.  Providing training, keeping equipment in good repair, and forming safety committees are just a few ways that employers can help keep their workers safe.  In the event that a work related injury occurs despite these measures, the workers’ compensation system comes into play.  The workers’ compensation system is a complex series of statutes and case law that has evolved over time.  Understanding why we have this system can help employers and employees alike better comprehend their rights and responsibilities in the context of workers’ compensation.

Workers’ compensation provides protection for both employees and employers.  When an employee sustains a work related injury, it could mean that he or she is completely unable to work and provide for his or her family.  With workers’ compensation, the employee is able to still receive income.  The employee can also receive reimbursement for reasonable medical expenses.  This is designed to help the employee heal so he or she can return to work as soon as possible.  With workers’ compensation, the employee is also protected from the employer taking retaliatory action due to filing a workers’ compensation claim.

An employer also enjoys protection under this system.  The California workers’ compensation system is a “no fault” system.  This means that the employee does not have to prove that the injury occurred as a result of the negligent or intentional conduct of the employer.  The other side to this, however, is that the employee is typically barred from filing a tort claim against the employer to recover for the injuries.  Instead, the employee must seek recompense for injuries through workers’ compensation.  This protects the employer from repetitive or even frivolous law suits.

It is important to remember that for many years, there were no health or safety standards for work place conditions.  As a result, employees were frequently injured or even killed on the job, and their families would have no method of redress.  The workers’ compensation system helps make sure that employers are incentivized to keep their business safe, and employees are not able to make a “double recovery” by suing in tort as well as receiving benefits.

We have extensive experience with the workers’ compensation system and explaining an employer’s rights and responsibilities.  Contact us today for a consultation.

Origin and Purpose of Workers’ Compensation

The majority of employers take many measures to help make sure their employees are as safe as possible at work.  Employers may decide to provide extra safety training, purchase and install safety technology, or form safety committees, just to name a few examples.  Unfortunately, despite the most diligent efforts, it is likely that at some point, an employee will sustain a work-related injury.  When that happens, the employee may file for workers’ compensation.

The modern workers’ compensation system can trace its origin to the Workers’ Accident Insurance system that was put into place by Otto von Bismark in 1881.  The motivation behind enacting this system was what was referenced as the “unholy trinity” of tort defenses that were available at that time, including contributory negligence, assumption of risk, and the fellow servant rule.  In other words, it was much more difficult for injured employees to be compensated if they were injured on the job.

Different states here in the United States started implementing workers’ compensation systems before the turn of the century, with the first state-wide system being instituted by Maryland in 1902.  Workers’ compensation provided a much needed outlet for injured employees to seek compensation for industrial injuries.  The workers’ compensation system is designed to protect both the employer and the injured employee.  Workers’ compensation in California is a “no fault” system.  This means that the injured employee does not have to prove the injury was a result of negligence or intentional acts on behalf of the employer.  Similarly, the employer is protected from law suits from the employee, with only a few exceptions.

It is no secret that at the turn of the century, industrial working conditions for most Americans were quite dangerous, with few regulations in place to require employers make sure their workers were safe.  Especially in factories or manual labor fields, it was common for employees to sustain truly horrific injuries.  By instituting worker’s compensation, employers were motivated to make sure their businesses were as safe as possible for their employees.  In addition, employers could feel at ease knowing that their employees could not sue for negligence if the employee sustained an injury because the employer overlooked some safety measure.

We have extensive experience helping our clients understand the workers’ compensation system.  Call us today to talk about what we can do to help you.

Occupational Diseases

Workers’ compensation is designed to provide financial support and relief to employees who sustain work related injuries.  When most people think of workers’ compensation, they think of broken arms, concussions, slip and fall injuries, or other physical injuries that happen from some type of accident.  However, occupational diseases are also compensable and qualifying injuries under the workers’ compensation system.

Occupational injuries are wounds or illnesses that result from the work environment.  One of the most common occupational injuries for office workers is carpal tunnel syndrome.  Carpal tunnel syndrome is damage to the nerves resulting from repetitive movement, which typically results from typing on a keyboard for extended periods of time in this context.  However, occupational injuries can also include lung disease, cancer, brain damage, or a variety of skin diseases, depending on the working conditions.

If an employee believes that he or she has sustained an occupational disease, he or she much file a Notice of Occupational Disease and Claim Compensation Form.  The employee must notify the employer and make sure to complete all required paperwork, just like any other workers’ compensation claim.  The employee will also need to provide medical evidence that the injury is directly caused by the working conditions or duties.

It is also important to understand that occupational injuries are typically more impacted by a discussion of “cumulative injuries” than injuries resulting from an accident.  For example, carpal tunnel syndrome may result only from work for the current employer.  However, it is also likely that an employee has sustained at least part of that injury prior to employment with the current employer, especially where the employee has not worked for the employer for a very long time.  However, just because an employee sustained part of the injury before starting employment at the current job does not mean that he or she is ineligible for workers’ compensation benefits.  In cases where the employee has sustained permanent injury, for example, the employer is only responsible for the portion of the injury sustained during employment, which is a process called “apportionment.”.  In addition, employers need to know that an employee who aggravates a non-industrial injury during employment can still request workers’ compensation benefits.

If you have questions about the types of injuries that your business may be responsible for, call us today.  We have extensive experience helping business owners understand their rights and responsibilities under California law.

Who Chooses the Doctor?

The workers’ compensation system provides important rights and responsibilities for both employees and employers.  Employees can rest easy knowing that they can receive benefits and medical care costs if they suffer a work-related injury.  Employers can also feel a sense of relief knowing that the workers’ compensation system means that the employee cannot sue for the injury, except in certain limited circumstances.  Despite these reassuring facts, workers’ compensation does require several important procedural steps.  One of the most obvious is that the injured employee will have to get medical attention.  As the medical diagnoses and care are clearly an integral part of the workers’ compensation case, employers may wonder who gets to choose the doctor for the employee?

The medical care provider plays an essential role in the workers’ compensation case.  The doctor will diagnose the condition and determine if the injury was a result of working conditions.  The doctor will also decide how long the employee must stay out of work and what accommodations are necessary when the employee does return to the work force.  The doctor will also decide when the employee’s medical condition has stabilized and whether the employee has any permanent disability.

Before an injury occurs, an employee has the right to “predesignate” his or her personal doctor.  This means that if and when the employee sustains a work related injury, he or she can go directly to that personal, pre-designated physician for treatment.  California labor code 4600 requires employers to give employees the necessary paperwork to predesignate a treating physician.

If an employee has failed to predesignate a health care provider, then he or she will likely not be able to choose the initial physician that he or she sees for treatment of the industrial injury.  Typically the workers’ compensation insurance provider or the employer itself will have a “medical provider network.”  The employee will need to choose a doctor who is included in that network.  There are some important exceptions to this general rule.  First, if the employee needs emergency care, it is not required that he or she use a physician including in the medical provider network.  In addition, if the employer has failed to provide certain required notices or information, the employee may also not be required to use a doctor in the MPN.

We have extensive experience helping our clients understand the workers’ compensation process and how it can impact their business.  Contact us today for a consultation to talk about your business.

Handymen, Nannies, Small Businesses, and Workers’ Compensation

Millions of Americans run their own small business.  Whether that business is the primary source of income for the family or just a side job to help provide supplemental income, business owners are all well aware that there are many regulations surrounding formation and running a business.  In addition, many people choose to employ other individuals for help around the house, including nannies and handymen.  Whether you have a small business or you employ others to help you around the house, it is important that you understand your rights and responsibilities regarding workers’ compensation.

California labor code provides that employers are obligated to carry workers’ compensation insurance.  This is true even if the business has only one employee.  This is also true of businesses which are located outside the state of California but still do business in this state.  In other words, if your business is located in Oregon but you sometimes do business in California, you are stills subject to the California requirement that you carry workers’ compensation insurance.  For a sole proprietorship, the law does not usually require workers; compensation if the business has no employees.  The important exception to this is for roofing contractors.  All C-39 roofing contractors in California are required to carry workers’ compensation insurance and file a valid certification with the state.

It is also important to understand your obligation regarding workers’ compensation insurance if you use the services of a nanny or a handyman.  Under California labor code 3352(h), “any person employed by the owner or occupant of a residential dwelling whose duties are incidental to the ownership, maintenance, or use of the dwelling, including the care and supervision of children, or whose duties are personal and not in the course of the trade, business, profession, or occupation of the owner or occupant” is classified as an employee.  This means that you may be required to carry workers’ compensation insurance for your nanny or handyman.  California law goes on to state that if the person has worked less than 52 hours in the 90 days before the injury was sustained or earned less than $100 in wages during that time, the person is not an employee for worker’s compensation purposes.

We have extensive experience helping our clients understand the rights and responsibilities concerning workers’ compensation insurance.  Contact us today to talk about your options.

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