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Elderly contractor charged with workers comp fraud


There are a number of demands on a business owner’s time when the business first opens. This includes obtaining the proper licenses, interviewing employees and securing workers’ compensation insurance. With all the things that go on when a business first opens, it is easy to miss a step. However, the consequences of neglecting critical details could be severe.

Such was the case of an employer in Pacific Grove. According to a report, the employer, a real estate construction contractor, had failed to register with the California Department of Economic Development (so that contributions could be made for unemployment insurance) and failed to purchase workers’ compensation insurance as required by state law. 

The California Department of Insurance discovered the abnormalities after one of the contractor’s employees was injured while on the job. The contractor paid the injured worker’s medical bills, but at the same time, he announced to all employees that he did not have workers’ comp insurance; and that if they wanted coverage, he would deduct it from their pay checks. One of the employees complained, and the investigation followed.

California law requires employers to purchase workers’ compensation insurance, and they will be subject to severe sanctions should they fail to do so. The employer in this matter was charged with a felony for failing to register with the Employment Development Department, and a misdemeanor for not offering health insurance. He has since pled guilty to both charges. Given his age, 70 years old, it remains to be seen whether he will be subject to jail time.

Nevertheless, the story is a reminder of the importance of taking time to purchase workers comp insurance for all people working in your business. 

Source: “California senior pleads guilty to workers’ comp fraud,” July 4, 2014

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