Every single person autonomously employed in the state of California is required to be covered by workers’ compensation coverage by law. And as some real estate businesses and independent brokers are discovering, attempting to fly under the radar of the government to save a little money on premiums may be more of a road to booming debt than a path to booming business.
According to a recent article in March’s Insurance Journal, a new “unit”steered by the Department of Industrial Relations is cracking down on business owners and independent brokers who “cut costs” on their workers’ compensation coverage.
Headed by California Labor Commissioner Julie A. Su, the Criminal Investigative Unit tracks down serial violators and cites them, resulting in heavy fines for businesses and sometimes up to a year in county jail for offenders.
“The largest percentage of citations that my office issues is for failure to secure workers’ compensation as required,” Su told Insurance Journal.
The damage illegally uninsured employers can have on both their business and workers is tremendous.
“If an agent of an uninsured broker gets injured while working and cannot collect the workers’ compensation benefits to which they are entitled through the broker’s policy… the Division of Workers’ Compensation, in turn, makes every attempt to collect from the broker on behalf of the Uninsured Employer’s Fund,” the Department of Industrial Relations [DIR} stated in the Fall 2004 Real Estate Bulletin.
When an investigation conducted by the Department of Industrial Relations Division of Labor Standards Enforcement determines that an employer is uninsured, that employer is ordered to halt business until they show proof of workers’ compensation. Additionally, that employer must pay off their civil citations which can carry fines up to $100,000, the DIR stated.
Real estate business owners need to know the difference between their employees and independent contractors, since they are required by law to provide workers’ compensation for their employees.
“Real estate brokers who erroneously require agents to carry their own workers’ compensation insurance may also be liable for potential claims for reimbursement and law suits from current or former sales agents,” the DIR stated in Real Estate Bulletin.
In addition to the illegality of underreporting on workers’ compensation, real estate owners who do not oblige by workers’ compensation standards hurt the real estate industry as a whole and further damage the United States’ already weak economy. While some brokers charge customers less by cutting corners with workers’ compensation, other brokers struggle with fees in order to abide by the law.
“We will enforce all of the laws that are on the books to protect the honest employers who are really struggling to compete against the underground economy and to protect working people and make sure they are paid the wages they earned,” Su told Insurance Journal.
Getting caught without insurance is often fatal for businesses, so purchasing insurance from the best insurance company needs to be a priority for business owners. However, not all insurance companies are created equal, and many insurers are misleading and unethically backed.
Do not allow your business to fail due to faulty workers’ compensation coverage. Let us supply you with the fair low cost coverage you deserve. Call us today at (800)-880-2747 or visit our Worker’s Comp page for more information or to receive a no obligation quote.