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Penalty for Not Having Workers Compensation Insurance in California

January 2, 2023 Legal Team

California requires employers to carry workers’ compensation insurance to protect employees if they suffer work-related injuries. If an employer fails to carry workers’ comp, they subject themselves to severe penalties.

Incarceration and Major Fines

A business with at least one part-time or full-time employee that fails to purchase workers’ compensation insurance is in violation of the California Labor Code. As a result, an employer can be charged with a misdemeanor, punishable by up to one year in county jail and/or fines equaling $10,000 or more.

Additionally, the state can impose a penalty of up to $100,000, and the Division of Labor Standards Enforcement (DLSE) will issue a fine for either twice the amount the employer would have paid in workers’ comp insurance premiums while they were uninsured or $1,500 per employee who worked during the uninsured time, whichever is greater.

The DLSE can also shut down operations and prohibit the employer from using employee labor until it obtains coverage. If the employer fails to comply with the stop order, it is a misdemeanor crime, punishable by up to 60 days in county jail and/or fines of up to $10,000. In addition, a penalty of $1,000 per employee, up to $100,000, will also be issued.

Add to these facts that if a worker was injured and files a claim with the Workers’ Compensation Appeals Board that finds it is valid, the court will compel the employer to cover wages, medical expenses, and more. In addition, a judge can issue penalties of up to $10,000 per employee on the payroll at the time the worker was injured for lack of insurance. If the workers’ comp claim is invalid, a judge can still issue fines of $2,000 per employee on the payroll at the time of the injury, up to a maximum of $100,000.

Employee Legal Action

On top of the extensive penalties and fines an uninsured employer can face, an injured employee can also hold them civilly liable for further compensation. Employees typically cannot sue employers for work-related injuries but have the legal right to if an employer does not carry workers’ compensation insurance. As a result, the injured employee has the right to pursue compensation for medical bills and lost income not covered by workers’ comp, pain and suffering, and more. If the court rules in favor of the injured worker, a significant damages award, in addition to extensive fines, can level a business.

What If My Employer Cannot Pay Me My Workers’ Comp Benefits?

If your employer does not have the funds to pay the workers’ comp benefits you are owed, they will be paid by the Uninsured Employers Benefits Trust Fund (UEBTF). The UEBTF exists to ensure that employees are awarded workers’ comp benefits when their employers are illegally uninsured. A separate claim must be filed with the UEBTF to begin this process. The UEBTF will then seek reimbursement from your employer. If you have questions about your claim, speak with an experienced workers’ compensation attorney in Orange County.