The Department of Industrial Relations (DIR) explains that all employers in California are legally required to purchase no-fault workers’ compensation coverage. Should they fail to do so, they are an improperly uninsured employer. Employers that are uninsured can face major problems if one of their workers is hurt on the job. Here, our Sacramento workers’ compensation defense lawyer describes four potential problems that uninsured employers could face after a workplace accident in California.
1. A Personal Injury Lawsuit (Civil Legal Claim)
In California, employers are mandated to provide workers’ compensation insurance. Should an employee get injured at work and the employer lacks this insurance, the employee can directly file a personal injury lawsuit. Unlike a workers’ compensation claim—where benefits are predetermined and cover things like medical bills and partial wage replacement—a civil legal claim can demand compensation for full lost wages, medical expenses, pain and suffering, and even punitive damages.
2. Additional Civil Financial Penalties
Apart from potential personal injury claims, the state of California also imposes financial penalties on uninsured employers. These penalties can range from minor fines to significant amounts, depending on the duration of non-compliance and the nature of the incident. An uninsured employer in California may be fined up to $10,000.00 per uninsured employee. The civil financial penalties can add up fast.
3. Higher Workers’ Compensation Rates Going Forward
An uninsured employer will be required to obtain workers’ compensation coverage going forward. If an employer is found without workers’ compensation insurance after an accident, future insurance premiums can skyrocket. Once the employer seeks to become compliant after being uninsured, they may be classified as high-risk by insurance providers. Beyond this, California imposes an automatic surcharge on uninsured employers. A company or organization in California could be required to pay double workers’ compensation premiums for up to three years.
4. Suspension of Business Operations (Court Order)
The state has the authority to issue a Stop Order against the business operations of any uninsured employer. The order prohibits the use of employee labor until insurance is secured. What does this mean in practice? It would effectively suspend business operations. In other words, an employer that fails to obtain workers’ compensation insurance coverage in California could actually see its business shut down as an enforcement mechanism. Even after a company is shut down, California authorities could continue to pursue financial penalties directly from the business owner.
Note: In cases in which an employer’s failure to obtain workers’ compensation coverage was deemed willful, a business owner could potentially even face criminal charges.
Get Help From Our Sacramento Uninsured Employer Workers Compensation Defense Lawyer Today
At Yrulegui & Roberts, our Sacramento workers’ compensation defense attorney has extensive experience handling complex uninsured employer claims. If you have any questions about an uninsured employer workers’ compensation claim, we can help. Call us now or contact us directly online to schedule your fully confidential initial appointment. We defend uninsured employers in workers’ compensation claims in Sacramento and all across the surrounding region.