Workers’ Compensation Audits

If you have your own business, you likely know there are many regulations that you need to comply with, ranging from federal tax laws to local zoning ordinances.  In California, you will also need to make sure your business complies with all the requirements of the California Labor Code, including the requirement that almost every business must carry workers’ compensation insurance covering all of their employees.  In addition to complying with the law, you will need to cooperate with your workers’ compensation insurance carrier.  One way you will need to cooperate workers’ compensation insurance carrier will be during a workers’ compensation audit.

Workers’ compensation insurance carriers will need to comply with their annual workers’ compensation audit.  It is likely that when your policy is set to expire, you will receive a letter or a phone call informing you that it is necessary to complete a workers’ compensation audit if you wish to continue using that company for workers’ compensation insurance.  Keep in mind that the letter or phone call may come from a company other than your workers’ compensation insurance provider, as many large insurance companies outsource their audit process.

In general, the audit process exists to make sure that your business still has the proper type and amount of workers’ compensation insurance.  For example, if your business has grown from 50 employees to 250 employees, it is likely your payroll will increase your insurance premium.  In general, auditors will request documents including tax forms, payroll records, and certificates of insurance if you have hired any subcontractors.  If you are unable to provide licenses and certificates of insurance for subcontractors, your insurance company will likely charge you additional premium for subcontractors’ workers’ compensation insurance.  They will also ask about job descriptions for each of your employees.  One way you can facilitate the auditing process is to ask the auditor if there is a specific order in which he or she would like the papers organized.

During the audit, your auditor will aim to make sure your business is placed in the correct rate class.  The rate class code has a direct impact on your insurance premium.  If you feel that you have been misclassified, you should immediately discuss the issue with your auditor.

We have extensive experience helping business owners understand their rights and responsibilities, including concerning workers’ compensation audits  Contact us today for a consultation.

My Employee is Injured But I Don’t Have Insurance

The area of workers’ compensation law is one that is complex and nuanced.  Employers know that it is important to follow California rules and regulations about how to conduct their business, including abiding by the workers’ compensation laws.  While there are a variety of code provisions that impose affirmative duties on an employer in the workers’ compensation context, one of the most important is the almost universal requirement for employers to carry workers’ compensation insurance.  If you have failed to follow this provision and your employee has sustained a work-related injury, you may be wondering what are the important next steps.

The first step that you should take if you failed to carry workers’ compensation insurance and the employee has sustained a work-related injury is to retain a skilled attorney.  Failure to carry workers’ compensation insurance can result in severe civil penalties or even criminal prosecution.  Accordingly, you need to consult an attorney immediately to protect yourself and your business.

Next, you need to understand that just because you failed to carry insurance will not mean the business will not be responsible for medical bills.  To the contrary, an employer can still be held responsible for payment of all medical bills associated with the treatment of the work-related injury.  In addition, unlike a typical workers’ compensation case, there is no law restricting the employee from filing a civil lawsuit against the employer.  In this type of lawsuit, the employer will be presumed to have acted negligently and cannot use the defense of contributory negligence.  The result can be a very sizeable civil award to the employee.

If your business does not have the resources to pay the benefits for the injured employee, the Uninsured Employers Benefit Trust Fund can pay the workers’ compensation benefits. After the  case has been resolved and a final sum of damages awarded, the UEBTF can pay this amount to the employee.  The employer will be responsible for reimbursing the UEBTF for everything it has to pay out to the employee.  To request payment of workers’ compensation benefits from the UEBTF, the employer must apply for payment and provide certain documentation.  Ensuring your employee receives compensation from the UEBTF does not mean that you cannot be fined or even incarcerated for your failure to carry insurance.

We have externsive experience with helping clients when they have failed to carry the required insurance.  Call us today for a consultation.

What Is In the “Course and Scope of Employment?

Workers’ compensation is a system designed to protect both employees and employers after an employee sustains a work-related injury.  The process protects the employee by providing a method for the employee to receive medical treatment and disability benefits.  The process also protects employers by preventing an employee from receiving disability benefits and also suing the employer for damages.  In order to receive compensation for injuries and disability benefits, an employee must have sustained the injury in the course and scope of employment.  Accordingly, when moving forward with a workers’ compensation case, it is important for an employer to understand what “course and scope of employment” means in the context of workers’ compensation.

In its simplest terms, asking whether an employee was acting in the course and scope of employment is asking whether the employee was “working” for the employer at the time the injury occurred.  One of the easiest ways to figure this out is to ask whether at the time the injury occurred, was the employee doing something to benefit the employer.  For example, if an employee takes a break and drives to the post office to mail a personal letter, and is injured in a car accident on the way back to work, this would not be in the course and scope of employment.  However, if while at the post office, the employee also takes the time to mail several packages on behalf of the employer, then any injury sustained in the accident may very well be covered by workers’ compensation.

Employers should be careful not to always assume that any injury sustained by an employee occurred in the course and scope of employment.  This is true even if the employee is injured while on company property.  If the employee is not working at the time he or she was injured, then the injury did not occur in the course and scope of the job.  This would most often be seen where the employee has come into work on a day when he or she is not working, and is there to socialize or conduct personal business.  For example, if you own a grocery store and your employee comes in on his day off to buy groceries, he would not be eligible for workers’ compensation if he is injured at that time.  In other words, for an employee to recover under workers’ compensation, he needs to be performing something work-related at the time.

We have extensive experience helping our clients understand the requirements of a workers’ compensation claim.  Call us today to talk about your case and your business.

Documenting Injuries

Employers know that it is important to take all necessary measures to help keep their employees, customers, and clients safe in the workplace.  These measures include actions such as keeping equipment in good repair, conducting regular safety training and forming safety committees.  Unfortunately, despite the best efforts of even the most diligent employer, workplace injuries will occur.  If this happens at your place of business, it is important to make sure you properly document the injuries.

When an employee is injured on the job, it is that employee’s responsibility to report that injury to the employer.  Once that takes place, the employer is required to then provide the employee with a claim form.  The employee fills out the form and returns it to you.  The employer then completes the form and submits it to the workers’ compensation insurance provider, which starts the claim.  Within fourteen days, the insurance company will send you a notice about the status of the claim and whether or not it has been accepted.  Employers need to be aware that within one day of receiving a claim form from the employee, the employer is required to authorize medical treatment under industrial guidelines, up to a maximum of $10,000 while the claim is being investigated.  In other words, the employer cannot wait until the investigation has been completed before providing medical treatment funding to the injured employee.

The employer should take other steps to document the injury and the incident as much as possible, and should not rely exclusively on the injured employee’s account of the incident.  An employer should take steps to promptly obtain witness statements from any other employees who may have witnessed the injury.  If the employer has surveillance cameras, the footage should be reviewed, and copies of the recording provided promptly to the insurance provider.  Employers can also gather information about the injury by talking to others who commonly perform the same or similar tasks as the injured employee.  These other workers can sometimes provide important information about whether the injury likely occurred in the way explained by the injured worker and point out other problem areas in the department that can be rectified to reduce the chances of future injuries.

We have extensive experience helping our clients understand the workers’ compensation process and the documentation your business will need to complete. Call us today for a consultation.

What Workers’ Compensation Won’t Cover

Workers’ compensation is an essential component of the social welfare system in California.  With workers’ compensation, an employee can receive medical expenses to treat the work-related injury, replacement for lost wages, and permanent benefits if the disability is permanent.  Workers’ compensation benefits can also help to provide training for a new career if the injured employee is permanently disabled and unable to return to work in the capacity he or she previously worked.  There are, however, some things that workers’ compensation will not cover.

One thing that workers’ compensation will not cover is if the employee has an injury that is self-inflicted.  For example, if an employee intentionally slices his arm on a piece of equipment, workers’ compensation would not cover that injury.  Employers should also be cautious of these injuries, as an employee trying to claim workers’ compensation benefits for an injury that was intentionally self-inflicted may also be committing insurance fraud.

Another way that an employee’s injuries may not be covered by workers’ compensation is when the injury was not incurred during the course and scope of the employee’s employment duties.  One of the most common examples of this type of injury is when an employee gets in a car accident during work hours, but he or she is not engaged in work-related activities. For example, if the employee is on a lunch break or running a personal errand, that would not be in the course and scope of employment, and therefore any injury sustained during an accident would not be covered.

Third, some pre-existing injuries will not merit a new workers’ compensation award.  Employers need to keep in mind that if a pre-existing injury is aggravated and worsens as a result of employment, then the employee may be able to recover under workers’ compensation. In other words, whether an employee can recover under workers’ compensation at your business as a result of disability and injury related to a pre-existing injury is a delicate and sometimes complicated inquiry.

Finally, if an employee is injured during an altercation at work that he or she started, then workers’ compensation may not cover those injuries. For example, if your employee assaults a customer, then any injuries sustained in the ensuing fight would not be covered.  However, if the employee is assaulted first by the customer, the injuries may be covered.

If you have questions about whether the circumstances in your case will qualify for workers’ compensation, call us today.  We can help you understand the workers’ compensation system and how your business fits within it.

Can I Delay Benefits If I Suspect My Employee of Workers’ Compensation Fraud

Workers’ compensation fraud costs Californians tens of millions of dollars each year.  The state of California has put into place many programs, laws, and departments to help combat this type of fraud.  The programs put in place help stop fraud before it starts, as well as prosecuting those who have already committed these crimes.  It is admirable for employers to want to help with the efforts to put a stop to fraud.  Some employers may wonder if they can delay workers’ compensation benefits if they suspect their employee is committing fraud.

The short answer to this question is “no.”  There are a lot of potential red flags for workers’ compensation fraud that an employer can be on the lookout for.  These include such issues as a lack of witnesses to an injury, delayed reporting, or the first report of an incident coming straight for an attorney.  When an employer receives a report of an incident with one of these fraud red flags, it may be tempting to refuse to take the written report or even to hold off until the employee can have a medical evaluation.  This is not permitted under California law.  Even if you suspect your employee is faking the injury, you are still required to provide your employee with a workers’ compensation form within one working day after the employee reports the work-related injury or illness.  Once the employee returns the form, the employer will have one working day to forward the claim form to the claims administrator of the workers’ compensation insurance company.  There are no exceptions to this for potential fraud.

Not all suspicions of fraud come at the very beginning of the case.  It is possible that as the case progresses, an employer may see other signs of fraud, such as social media posting showing the employee is active, potential medical fraud, or malingering.  If this occurs, an employer still does not have the right to put a halt to or somehow intercept the payments that are being made to the employee under workers’ compensation.  Instead, the employer should carefully document all concerns and report them to his or her workers’ compensation claims administrator.

We have extensive experience with helping our clients understand the role of their business in fraud prevention.  Call us today to discuss your case and what we can do to help.

Time Limits in Workers’ Compensation

Most people understand that there are time limits in almost all types of legal cases, ranging from prosecution of domestic assault to suing for breach of contract.  Workers’ compensation is no exception.  There are time limits that need to be observed at many stages of the workers’ compensation case.  As an employer, you need to be familiar with some of these time limits to make sure you are properly observing the law and understand your rights and responsibilities.

The first time limit you should be aware of concerns the reporting of the injury.  When your employee sustains a work related injury, he or she is obligated by law to report that injury to you.  The employer is obligated to report the injury to the employer within thirty days of sustaining the injury or becoming aware of the injury.  The employee needs to fill out a DWC-1 claim form providing details about the injury.

Another essential time limit to be aware of is that reporting an injury to the employer is not the same as filing a claim for workers’ compensation benefits.  Under California labor code 4906(g), the injured employee is obligated to file an Application for Adjudication of Claim and Declaration with the workers’ compensation appeals board to start the case.  The worker must file this application within one year of the job-related injury or illness.  If the employee fails to meet this time limit, he or she may lose the right to file a case at all.  Once the case is commenced, there is no time limit on how long the case can last.  In the optimal circumstance, the procedure will go smoothly and it can be concluded without too much trouble.  The increasing use of alternative dispute resolution helps conclude cases quicker and with more efficiency than in the past.  If no settlement can be reached, however, the case can last for months or even longer.

There are some limited circumstances when the statute of limitations may be extended.  One common situation when this may happen is where the injured employee is under eighteen at the time he or she is injured on the job.  In that case, the statute of limitations is “tolled” and does not start to run until the injured employee turns eighteen.  Another common exception is for repetitive stress injuries, such as carpal tunnel syndrome.  In those types of cases, the statute of limitations starts to run from the date the employee became aware of the injury and also became aware the injury was a result of employment.

We have extensive experience with helping our clients understand the necessary procedures in workers’ compensation case.  Call us today to discuss your case and what we can do to help.

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.

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.

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

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