When it comes to ensuring the health of employees, the government has sought to protect workers by requiring businesses to maintain a workers’ compensation insurance policy. Some businesses try to avoid paying premiums by neglecting this type of insurance, but the real cost of this illegal action may be surprising.
The State of California Industrial Relations Department states that fines of up to $10,000 and a maximum of 60 days jail time can be issued to employers who are uninsured. Additional penalties will be decided by a judge and can include payment of thousands of dollars per employee. If an employee does become injured and finds that his or her employer does not carry workers compensation insurance, there is a benefit trust fund for uninsured employees that can help.
In addition to these, there are other monetary penalties that employers need to consider. AJ Insurance Services states that the hospital bills of an injured employee will become the responsibility of the employer. Also, employers who are found doing business without coverage will be forced to stop operations immediately. Labor can only be resumed after workers’ compensation insurance has been purchased, and all applicable fines and penalties paid. The loss of profits can drastically affect the success of the company.
Additionally, an employee who is injured can file a lawsuit against their employer, adding on legal costs and court fees. The criminal charges incurred could remain on his or her permanent record and affect future job prospects. The company’s reputation can also be damaged, causing a loss of revenue for the entire company.