Task Force Finds Employers in Violation of Workers' Compensation Laws

In California, employers and advocates in Sacramento have been complaining about the workers' compensation program for the past ten years.

They say that the expense of workers' compensation insurance is outrageous and employees routinely game the system by filing fake claims and exaggerating medical conditions.

The two problems go hand in hand.

As more workers' compensation claims are filed for on-the-job injuries and work-related illnesses and disability benefits are paid, the cost of employer workers' compensation insurance coverage skyrockets.

However, a recent report by the Los Angeles Times highlighted data that indicates employers in California may be violating workers' compensation laws more often than workers.

State agents have taken notice and are now taking a closer look at businesses that may be disregarding workers' compensation laws, thereby driving up insurance premiums and putting their employees at risk.

The Economic and Employment Enforcement Coalition is a task force comprised of agents from various government entities that are in charge of enforcing workers' compensation laws.

In July, agents from the Economic and Employment Coalition conducted a series of unannounced visits to 22 garment shops in Southern California and San Francisco. The sweeps have continued into August as agents checked up on San Joaquin Valley farm labor contractors.

During these visits, the agents checked that the employers had valid workers' compensation insurance policies, current business licenses and followed proper payroll procedures.

Workers' compensation laws require that most employers purchase insurance policies that pay for medical expenses, disability payments and death benefits for employees who are injured or killed at work or who suffer from work-related illnesses. It is a basic, no-fault insurance that covers workers even if they are to blame or partially to blame for their work-related injuries, illnesses or deaths.

Workers' compensation is also is the sole remedy for injured workers. If an injury, illness or death happens at work, workers' compensation insurance pays the benefits and the injured worker is not allowed to file a personal injury lawsuit against the employer.

In this respect, workers' compensation laws protect employers from costly civil lawsuits.

In May, the state Department of Industrial Relations conducted a quarterly survey of 500 randomly chosen California businesses and discovered that at least 12.4% of those surveyed did not have workers' compensation insurance. Labor officials fined 62 of the companies a total of $191,000 for these violations.

Experts estimate that of the hundreds of thousands of workers who file workers' compensation claims each year, less than 10% are fraudulent.

The California Department of Insurance, state fraud investigators and local district attorneys filed 567 cases against employers for workers' compensation violations during fiscal year 2006-07. During the same time period, there were 473 cases filed against employees for workers' compensation fraud.

Based on the numbers and facts, employers are violating workers' compensation laws more often than injured workers are milking the system.

So far this year, the task force has conducted checks on 706 California businesses and assessed approximately $4 million in fines.

Scott Hauge, director of Small Business California, says that businesses which operate on the right side of the law welcome enforcement of workers' compensation laws. Hauge's organization sponsored legislation last year that authorized employer audits. The bill was signed into law by California Governor Arnold Schwarzenegger.

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