In California, businesses and organizations are required to obtain and maintain no-fault workers’ compensation coverage for their employees. An employer that is uninsured is in violation of the law—and, as such, could face civil and even criminal sanctions. What happens if coverage lapses for a short period of time? The short answer is that an employer is deemed uninsured and can be sanctioned for short lapses in coverage. Here, our Sacramento workers’ compensation defense law firm provides a more detailed overview of the key things employers should know about their exposure to sanctions as “uninsured” if they allow their coverage to lapse in California.
Know the Law: Employers Must Obtain Workers’ Compensation Coverage
Under California law (Labor Code § 3700), all employers—both for-profit companies and non-profit entities—are required to obtain workers’ compensation coverage. The law is designed to help ensure that any employee who gets hurt or sick because of their job can get medical care and wage support. For employers, not following this rule can lead to major legal problems.
When Coverage Lapses, an Employer in California is Considered Uninsured
In California, if an employer lets their workers’ compensation insurance lapse, even for a short time, they are considered uninsured. Described another way, this means that from the very moment that an employer’s workers’ compensation insurance expires, that employer is not covered. Even a minor gap in coverage can have serious consequences.
Potential Consequences for Uninsured Employers
If an employer in Sacramento or elsewhere in Central California is uninsured, it can face stiff legal sanctions. A proactive approach can help employers limit their risk of facing civil or even criminal penalties. Here is an overview of the potential consequences if workers’ compensation coverage lapses:
- Fines (Up to $10,000.00 per Worker): If found uninsured, employers in California may face fines of up to $10,000.00 for each worker employed at the time of the inspection.
- Personal Injury Lawsuit: An uninsured employer opens the door to personal injury lawsuits from employees injured on the job. An employer could face major liability.
- Double Workers’ Compensation Rates (Up to Three Years): For failing to maintain insurance, employers might also have to pay double the workers’ compensation premiums for three years.
- Suspension of Commercial Operations: In the worst cases, the state may suspend the operations of a business found without workers’ compensation insurance.
- Criminal Charges Against Business Owner: While unlikely if a workers’ compensation policy lapses for a very short period, a business owner can face criminal charges for this violation.
Consult With Our Workers’ Compensation Defense Lawyer in Sacramento
At Yrulegui & Roberts, our Sacramento, CA workers’ compensation defense attorneys have the professional and legal expertise to take on all types of uninsured employer cases. Have questions about defending an uninsured employer claim? Give us a phone call now or contact us online for your confidential case review. We handle workers’ compensation defense matters, including uninsured employer claims, in Sacramento and all across Central California.
