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California contractors with a lack of insurance

A report revealed that in the recent past, one sixth of all construction employees in California were misclassified or not reported to potentially avoid insurance and fair pay. This can place employers and their workers in a difficult situation if they experience an injury while at a job site, and there is a lack of insurance. As the economy recovers, California continues to grow its construction industry with a need for contractors.

Reports show that thousands of informal construction workers have been mislabeled so that certain employers may be able to avoid paying tax or insurance. Many of these employees are also paid about 40 percent less than a standard employee makes. A worker that feels their wage and hour rights have been violated may unknowingly expose a business that is failing to provide workers’ compensation insurance when they file a claim.

Failing to report or provide workers’ compensation insurance for workers may seem like an efficient plan to limit business expenses but may end up costing an employer extensively. This practice has potentially cost California close to $473 million dollars, in addition to millions in unpaid taxes to the government. Those that do provide proper insurance may be financially compensating for the mass of those that choose not to purchase coverage for their employees.

The amount of construction workers employed by California contractors for the current growing building industry continues to increase. Because of this, government and state authorities have been urged to exercise stricter enforcement, potentially making it more difficult for employers to operate with a lack of insurance. An employer that has been investigated for lacking workers’ comp coverage may seek professional help in minimizing the legal consequences and protecting company assets.

Source:, "Study: Construction workers unreported", Bonhia Lee, Aug. 29, 2014

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