Employers who do not cover employees for workers’ compensation face serious consequences.
All employers in California are required to carry workers’ compensation insurance by law. The employer can also be permissibly self-insured, legally uninsured, or illegally uninsured. An employer must pay for workers’ compensation as a cost of doing business in the state.
Failure to carry workers’ comp insurance can lead to criminal prosecution, fines, and result in expensive litigation. With the demand placed on employers in a tough economy, however, many employers have found it difficult to carry insurance or did not realize state law required them to do so. Even if the business employs only one worker, for example, and that worker is temporary, the employer must have workers’ compensation insurance.
Obviously, a situation in which a worker is injured on the job is not ideal under any circumstances. When the employer does not have workers’ compensation insurance, however, the potential consequences are extremely severe. An uninsured employer who is facing a workers’ comp claim must take immediate action to minimize adverse consequences which could become a parade of horrors.
Quite simply, when an injured worker files a workers’ compensation claim and the employer is uninsured, that employer must obtain legal representation. Failing to carry workers’ compensation insurance is a criminal misdemeanor, punishable by a personal fine of up to $10,000 or one year in jail, or both. For second offenses it goes to $50,000.
If an employer is uninsured and a worker files a workers’ comp claim, the employer is legally responsible for the payment of all medical bills associated with the injury. In addition, the employee may also file a civil lawsuit in which the uninsured employer is presumed negligent and loses the defense of contributory negligence. This could result in the recovery of damages amounting to a significant sum. Under the California Labor Code, if a workers’ compensation appeals board or the Director of Industrial Relations finds that an employer is illegally uninsured, it can issue a fine of up to $10,000 per employee if the injury is compensable, up to a maximum of $100,000, and $2,000 per employee even if the injury is not compensable.
With the very existence of business possibly at stake, uninsured employers will face the necessity to negotiate with the injured employee, governmental agencies, and providers of services others to reduce payments and fines. Employers facing uninsured workers’ compensation claims should contact an experienced uninsured employer workers’ compensation defense law firm to discuss their legal options. The legal and financial consequences of an uninsured workers compensation claim can seem overwhelming and ultimately become overwhelming, which is why experienced legal representation is needed.