An Uninsured Employer who is facing the Workers’ Compensation Appeals Board is in a precarious position that requires experienced and creative solutions. The Law Offices of George E. Corson IV regularly represent Uninsured Employers, and it is our goal to minimize the consequences that arise out of a Workers’ Compensation injury. With proper legal assistance, it is often possible to minimize and sometimes eliminate the pending Penalties and Fines. We specialize in finding solutions in the face of seemingly impossible odds.
Overview of How Uninsured Liability Occurs
California Workers’ Compensation laws require that all employers of one or more non-family employees have workers’ compensation insurance. This ensures that if an employee is injured, disabled, or killed in the workplace, compensatory benefits are available to the employee or his survivors. Workers can become Employees even if you believe you have taken necessary steps to avoid liability. For instance, if a homeowner has a homeowner’s liability policy, a mandatory WC Addendum often covers domestic employees injured while working on the premises. However, if you operate a business out of your home, there is a good chance that the Homeowner’s Policy will not cover employees of the business. Additionally, if a home is turned into a rental, that business use will often preclude WC coverage without an actual WC policy. Consequently, a Landlord can easily find himself uninsured if an unlicensed or uninsured paint/landscape contractor falls while cleaning up the property between tenants.
Hiring a Contractor who does not possess both a valid Contractor’s License AND a Workers’ Compensation policy for his employees places the Home or Business owner at financial risk. Paying an Unlicensed/Uninsured Contractor can turn them into Employees for purposes of Workers’ Compensation, even when that was no one’s intent. That can result in unintended liability for injuries occurring during the job. Saving $1,000 can easily cost $50,000 in this situation.
Worker’s compensation insurance is not the same as liability insurance, which provides coverage in the event of a non-employee injury on the premises, or medical insurance, which only covers medical bills for non-work-related conditions. If an employer does not have workers compensation insurance and is not self-insured as required by law, they are classified as an “Uninsured Employer.”
The State’s Role
In the event of an Uninsured Employer with a workers’ compensation case, the State of California must step in and pay the benefits due if the Employer does not. Payouts come from the Uninsured Employers Benefits Trust Fund, for benefits awarded by the Workers’ Compensation Appeals Board.
Because the State must pay the claims for Uninsured Employers, the penalties for noncompliance are steep. Many employers don’t understand the very serious civil and, in some cases, criminal consequences of being uninsured.
Penalties for uninsured employers may include any of the following:
- Prosecution for a misdemeanor punishable by imprisonment for up to one year, or by a fine of up to $10,000, or by both fine and imprisonment.
- Civil Negligence lawsuit, with a presumption of employer negligence.
- Administrative order or court injunction stopping business operation.
- A Penalty of up to $10,000 per Employee.
- Liability for the injured worker’s attorney fee.
- Attachment of home, cars, and other property or financial accounts.
- Assessment of 200% (Double) the Workers’ Compensation Premium for the period of Non-Insurance, up to a maximum of 3 years.