California law requires employers to purchase workers' compensation insurance as a benefit for employees. It is in place to protect the employees if they are injured or become ill on the job. If an employer chooses not adhere to the law, he or she may face criminal charges and hefty fines. Recently, a couple faced the consequences of not providing workers' compensation insurance to their employees for a period of about six years.
In 2014, the California Labor Commission discovered through an investigation of the couple's taxi cab company that it had not provided workers' compensation insurance to its 30 employees. In attempt to bypass the requirement, the couple classified their 30 employees as independent contractors. The couple justified the classification due to the employees' lease agreement concerning the cabs from the company.
Fined over half a million dollars, the cab company did not pay the fine and did not obtain the required insurance, but continued to operate the business. A judge ruled that the employees were not independent contractors and were entitled to coverage for workers' compensation. In December 2016, the couple agreed to a settlement. The agreed terms provided for the fine to be reduced to $200,000, but also required the business to close at the end of 2016.
As with this company, not all businesses adhere to the laws. Lawyers familiar workers' compensation law can offer peace of mind to any employee who suspects they may not be receiving rightful benefits. Being injured on job can be costly as medical and physical therapy bills can accumulate quickly. The ability to work and gain an income may be impacted as well.
Source: centralvalleybusinesstimes.com, "Taxi company shuts down over workers comp", Dec. 29, 2016