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Statewide sweep targeting work comp fraud results in 104 enforcement actions

Earlier this year, our blog discussed how multiple agencies in the state of California were officially joining forces to crack down on the so-called "underground economy," meaning both uninsured employers, and those employers who abuse state employment and work comp laws.

Specifically, the following government agencies/offices joined forces to form the new Labor Enforcement Task Force: the Department of Industrial Relations, the California Attorney General, District Attorneys in several counties, the Department of Insurance, the State Board of Equalization, the Bureau of Automotive Repair, the Employment Development Department, and the Contractors State License Board.

These participating agencies/offices stated that one of their primary goals was detecting and prosecuting work comp fraud, including instances where employers fail to obtain work comp coverage or purposely underreport payroll/misclassify employees in an attempt to secure a lower work comp coverage rate.

It appears as if the state is taking this commitment rather seriously as just yesterday Insurance Commissioner Dave Jones announced that a surprise raid in 11 counties -- including Los Angeles, Orange, Riverside and San Bernardino -- resulted in 104 enforcement actions.

Specifically, investigators paid a visit to suspected illegal work sites throughout the state from June 20-21, looking for unlicensed contractors and/or those contractors working in violation of the state's work comp laws.

"Operation Underground took aim at the 'off the books' activity of unscrupulous contractors allegedly operating illegally or without proper coverage for their workers," said Jones. "In doing so, they not only failed to protect their employees, but they create unfair competition in California."

While the names of the contractors or companies under investigation was not released, it appears that some of those who received work comp violations were ordered to stop work until they purchased the necessary work comp coverage and provided proof of the coverage to the Contractors State License Board.

If you are an uninsured California employer facing a real problem -- prospective fine, prosecution, an employee injury or litigation -- there are steps that can be taken to minimize the consequences. In these difficult circumstances, you may want to consider consulting with an experienced legal professional.

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


California Department of Insurance, "Insurance Commissioner Dave Jones announces statewide joint enforcement strike force operation," July 9, 2012

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