According to a report from the Insurance Journal, people associated with two separate Bay Area construction companies have been charged with workers’ compensation insurance fraud as well as a related conspiracy offense. The companies reportedly paid more than $12 million in unreported and/or misclassified wages to workers. The business owners and management employees deemed responsible are facing serious criminal charges. Within this blog post, our California workers’ compensation defense lawyer provides a more detailed discussion of the fraud charges leveled in this case.

California Contractors Face Serious Workers’ Compensation Fraud Charges

Two construction contractors from California’s Bay Area—Atlas Pavers and Centrox Construction —have been named in a serious workers’ compensation fraud case. Several specific individuals associated with these companies—Candido Silva, Itamar De Morais Junior, and Irma Ruiz-Alarco of Atlas Pavers and Christopher Ray Vieira and Gilbert Roland Guiotti of Centrox Construction—are facing criminal workers’ compensation fraud charges.

The Contra Costa District Attorney’s Office alleges that the companies conspired to misclassify workers in order to evade workers’ compensation insurance, payroll taxes, and insurance premiums. In total, state officials contend that more than $12 million in unreported or misclassified payments were made to workers by these companies between 2016 and 2019. As a consequence, authorities allege that workers’ compensation premiums were dramatically underpaid.

California Employers Must Properly Classify Workers and Report All Wages

California law mandates that employers must accurately classify their workers and report all wages. Doing so is critical to ensure that employees are granted the protections they are entitled to, such as workers’ compensation insurance, and that the state receives the necessary payroll taxes. The misclassification of workers, often labeling them as independent contractors instead of employees, can lead to significant tax evasion and deprive workers of essential benefits and protections. In such cases, employers may also sidestep obligations to pay overtime, provide rest breaks, and maintain workers’ compensation insurance.

Compliance with worker classification laws is not only necessary to help safeguard the rights of workers but also sustains fair competition among businesses. When companies misclassify workers and evade taxes and insurance premiums, they can unfairly underbid competitors who adhere to the law. Beyond undermining the integrity of the workers’ compensation market, violations can have far-reaching consequences for responsible individuals and businesses. They can face very serious sanctions, including, as this most recent Bay Area case demonstrates, serious criminal charges.

Set Up a Confidential Appointment With a California Workers’ Compensation Defense Lawyer Today

At Yrulegui & Roberts, our California workers’ compensation defense law firm has the professional expertise you can trust in the most complex of cases. If you have questions about a workers’ compensation fraud case or the reporting of wages/classification of workers, we can help. Call us now or contact us online to set up your fully confidential consultation. With offices in Fresno and throughout the region, we are well positioned to protect the rights and interests of our clients.