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 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 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 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.