FATHER AND SON IN NORTHERN CALIFORNIA CHARGED IN $12 MILLION WORKERS’ COMPENSATION FRAUD CASE

On October 26, 2022, the California Department of Insurance announced that a father and son duo have been charged in a $12 million workers’ compensation fraud case. Edgardo Cabrales Sr. and Edgar Cabrales Jr.—both of San Jose, CA—are charged with workers’ compensation fraud due to the intentional underreporting of employee wages and company payroll. Within this article, our Fresno workers’ compensation defense lawyer discusses the workers’ compensation fraud charges in more detail.

Workers’ Compensation Fraud Allegations: Underreporting of Payroll for Cleaning Companies

Collectively, Edgardo Cabrales Sr. and Edgar Cabrales Jr. own and operate two commercial cleaning companies that are based in Santa Clara County. The businesses are called Pine Building Maintenance (PBM) and Network Facility Management (NFM). Following up on suspicions of possible workers’ compensation fraud, California state authorities launched an investigation.

According to the findings of the California Department of Insurance, the father and son duo only reported a small share of their actual payroll since 2016. Across the two businesses (PBM and NFM), California officials contend that the business owners underreported payroll by as much as $12 million—leading to a nearly $4.3 million underpayment of workers’ compensation premiums.

California Law: Employers Must Obtain Workers’ Compensation Coverage, Accurately Report Payroll

California law is clear: Employers are required to purchase and maintain no-fault workers’ compensation insurance coverage for all employees, including temporary workers and part-time workers. To ensure that they pay the proper workers’ compensation premium, employers must accurately report their payroll.

If an employer does not purchase workers’ compensation coverage, intentionally misclassifies workers, or intentionally underreports payroll, the employer may be subject to civil penalties, including a fine of up to $10,000.00 per violation. Additionally, if an employer is found to be willfully uninsured, all of the company’s officers and directors may be personally liable for injured workers’ medical and income benefits, plus interest and fines. Of course, as this case demonstrates, business owners may also face felony criminal charges for workers’ compensation fraud.

California Regulators are Cracking Down on Workers’ Compensation Fraud

Every party involved in the workers’ compensation system—from employers that play by the rules to individual workers to insurance carriers—is affected by workers’ compensation fraud. The costs are spread throughout the system. California regulators are proactively cracking down on workers’ compensation fraud. A business owner that intentionally underreports payroll for the purposes of unlawfully reducing workers’ compensation premiums can face felony charges.

Contact Our California Workers’ Compensation Lawyer for Immediate Help With Your Legal Case

At Yrulegui & Roberts, our Fresno workers’ compensation defense attorney has the professional skills and legal expertise that you can count on. If you have specific concerns about workers’ compensation fraud, we are here as your reliable legal resource. Call us or connect with us online to arrange your completely private initial appointment with a workers’ compensation defense lawyer. We provide solutions-driven workers’ compensation defense legal services in Fresno and throughout the wider region.