California has a mandatory workers’ compensation law in place. Under California law (Labor Code § 3700), all businesses and organizations that have employees in the state must meet this requirement. An employer that is uninsured in violation of California’s workers’ compensation law can face significant sanctions. In this article, our Bakersfield workers’ compensation defense attorney highlights five potential penalties that you could face if your California company fails to obtain workers’ compensation coverage.

  1. Civil Legal Action (Personal Injury Liability)

With limited exceptions, workers’ compensation insurance in California is the sole legal remedy that injured employees have against their employer. In other words, a person who is hurt on the job in California cannot file a personal injury lawsuit (negligence claim) against their employer. However, uninsured employers do not get this protection. They can face a liability claim from an injured employee and may be responsible for the full extent of their medical bills, lost wages, pain and suffering, and other damages.

  • Civil Fines (Up to $10,000.00 Per Employee)

California regulators can impose civil fines on an employer that is unlawfully uninsured. The extent of the fines will depend on the specific nature of the allegations. That being said, state authorities may be able to impose a fine of up to $10,000.00 per uninsured employee against an employer that fails to obtain workers’ compensation coverage. 

  • Assessment of Double Workers’ Compensation Rate for Up to the Three Years

Another financial sanction that uninsured employers in California may face is an assessment of double (200%) workers’ compensation premium for the length of time that they were improperly uninsured for up to a maximum period of three years. This can be a significant financial penalty. It could easily lead to tens of thousands of dollars in additional costs.

  • Court Injunction that Suspends Business Operation

In more extreme cases, the State of California may move to shut down a business for its failure to meet its workers’ compensation requirements. An employer that is unlawfully uninsured could be subject to an administrative order or a court order that requires it to suspend business operations. In other words, a company could be temporarily shut down.

  • Criminal Prosecution of the Business Owner

Finally, California has a criminal statute in place for uninsured workers’ compensation claims. A business owner that willfully violates California’s workers’ compensation insurance requirement could be arrested and charged with a misdemeanor criminal offense. A conviction for this crime could carry a maximum of one year in jail and additional civil financial penalties.

Set Up a Confidential Consultation With a Bakersfield, CA Workers’ Compensation Defense Attorney

At Yrulegui & Roberts, our California workers’ compensation defense lawyers are skilled, experienced advocates for employers, claim administrators, and insurance carriers. If you have specific questions or concerns about uninsured employer claims, we are here to help. Contact us today for your fully confidential case review. Our workers’ compensation defense team handles uninsured employer claims in Bakersfield, Kern County, and throughout the surrounding region in Central California.