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California couple faces workers' compensation fraud allegations

Insured employers in California can be accused of workers' compensation fraud if the authorities suspect that the business owner or management has underreported or unreported their payroll.

If this is the case, then the employer can face serious fraud allegations under the state's workers' compensation system. A conviction for workers' compensation fraud can include substantial fines and even jail time.

Unfortunately this was the case for a couple that was recently sentenced for failing to pay more than $600,000 in workers' compensation premiums during a five-year period.

The couple, who had once been married, remained in business together as the owners of a roofing company.

They were arrested earlier this year as a result of an investigation into allegations that they failed to accurately report employee wages for payroll tax purposes, as well as for workers' compensation premium computations.

This type of underreporting is considered workers' compensation fraud. This past summer, both of the accused pleaded no contest to eight counts of workers' compensation premium fraud.

Prosecutors were hoping to put these two business owners behind bars for seven years. However, the maximum sentence they could receive in this case was capped at three years.

In the meantime, the couple made a $200,000 payment in restitution for the fraud. They are also expected to pay back the remaining $400,000. They were recently sentenced to eight months in a work program and under house arrest, followed by five years of probation.

If you are a business owner in California, it is important that you understand the requirements of the workers' compensation system, and the potential consequences for failing to abide by those rules.

This post was provided for informational purposes only and is not to be construed as legal advice.

Source: The Daily Journal, "Couple jailed for workers' comp fraud," Nov. 28, 2012

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