What Are The Potential Penalties For An Uninsured employer?

December 03, 2018
Sacks & Zolonz, LLP

A. There are many. First of all, insurance coverage is required by law, and failure to obtain coverage is a criminal offense. Specifically, it is a misdemeanor, punishable by a fine up to $10,000 and/or one year in the county jail.

The Workers’ Compensation Appeals Board can also assess penalties in a workers compensation case if you are uninsured. These penalties can be assessed at $2,000 or $10,000 per employee, depending upon the ruling in the case, up to a maximum of $100,000.

Even absent any workplace injury, the Director of Industrial Relations and the Division of Labor Standards Enforcement (DLSE) can issue a stop order prohibiting the use of employee labor until coverage is obtained. Failing to comply with a stop order is a crime punishable by up to 60 days in jail and a fine up to $10,000. DLSE also imposes a penalty of $1,000 per employee up to $100,000. Also, your employees continue to be paid during the work stoppage for up to 10 days.

The Workers’ Compensation Division can make numerous penalty assessment orders under the law, including $1,500 per employee as an additional penalty for being uninsured, and another penalty assessment order for being uninsured more than a week, which is either double the amount the employer would have paid in premiums or $1,500 per employee.

Finally, you will be responsible to pay all bills for a sick or injured worker, and you could find yourself subject to a civil lawsuit. Workers’ compensation is normally the exclusive recourse for an injured worker, prohibiting the employee from suing the employer, but this does not apply to uninsured employers.

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