According to a report from Insurance Journal, California regulators have uncovered an alleged seven-figure workers’ compensation fraud scheme in the Fresno area. An employer stands accused of intentionally underreporting payroll—thereby unlawfully saving itself approximately more than $100,000.00 in workers’ compensation premiums. Proper reporting of payroll is essential. Within this blog post, our Fresno workers’ compensation defense lawyer discusses the allegations raised and explains what employers and insurers should know about underreporting payroll in California.

Owner of Private Security Company in California Charged With Workers’ Compensation Fraud

A business owner in Fresno is the latest person to face enforcement action. The owner of a Fresno-based private security firm called B&R Private Security LLC stands accused of underreporting his company’s payroll by around $1.6 million. As a consequence, the company underpaid its workers’ compensation premiums by nearly $130,000.00. The company’s owner, Luis Burgos and his former business partner Sohan Singh, were both arrested on workers’ compensation fraud charges. The Central Valley Workers’ Compensation Fraud Task Force is the intergovernmental agency that led the payroll fraud investigation.

Underreporting of Payroll is a Major Workers’ Compensation Fraud Concern in California

Fraud poses a significant threat to the stability of our state’s workers’ compensation system. Over the past several years, California regulators have been ramping up efforts to crack down on workers’ compensation fraud. Underreporting of payroll by employers is one of the primary areas of concern. Here are key points that employers and insurers should know about the issue:

  • Workers’ Compensation Premiums are Based on Payroll Costs and Industry: Workers’ compensation insurance premiums are calculated based on an employer’s payroll costs and the risk level associated with their specific industry. Industries with higher risk factors, such as construction, generally have higher premiums.
  • Employers Must Accurately Report Payroll: California law mandates that employers accurately report their payroll to the workers’ compensation insurance carrier. Among other things, proper payroll reporting in California includes reporting the total amount of wages paid, the number of employees, and the classification of work performed. Accurate reporting is crucial to maintaining a fair and functioning workers’ compensation system.
  • The Intentional Failure to Do So is Workers’ Compensation Fraud: When an employer intentionally underreports payroll to reduce their workers’ compensation insurance premiums, they are committing fraud. In California, workers’ compensation fraud—including the deliberate underreporting of payroll—is a felony criminal offense that can carry very serious penalties.

Speak to a Workers’ Compensation Defense Attorney in Fresno, California

At Yrulegui & Roberts, our Fresno workers’ compensation defense lawyers have the professional expertise that you can count on in even the most complex of cases. Have specific legal questions about a workers’ compensation fraud case? We are here as a professional resource. Contact us today to set up a fully confidential review and evaluation of your case. We provide reliable, solutions-first workers’ compensation defense services in Fresno, Fresno County, and the wider San Joaquin Valley.