The California Labor Code requires employers to provide
workers’ compensation coverage to their employees and to pay for benefits if an
employee becomes injured or ill because of work. Due to the costs, some
employers don’t comply with their obligations—at times going so far as to
actively discourage their employees from filing legitimate claims. But as one
California employer recently discovered, taking this route can be far more
costly in the long run—and can even lead to criminal charges.
Managers Plead Guilty to Misdemeanors
The Amador County District Attorney’s Office and the
California Department of Insurance launched a criminal investigation in 2007
after store managers at a Raley’s in Roseville were alleged to have discouraged
an injured worker from filing a workers’ comp claim.
The investigation revealed that this was no isolated
incident. Raley’s managers regularly suggested that injured employees turn to
their own health insurance for work-related injuries, rather than report
injuries to the required state agencies. Criminal charges were brought against
two store managers, who pleaded guilty to misdemeanor violations. Prosecutors
also filed a civil lawsuit against Raley’s under the unlawful business
Raley’s on the Hook for Penalties
In the settlement of the unlawful practices case, Raley’s
agreed to change its workers’ comp policies—including mandatory training
for store managers, improved recordkeeping, and contracting with a phone-in
medical advice company to evaluate injuries and recommend treatment.
It also agreed to pay $550,000 in penalties and in costs of
the investigation and enforcement as well as $30,000 to fund training for law
enforcement investigators. The settlement includes an added $150,000 sanction
if other violations occur during the next 5 years.
Your Obligations Under Workers’ Comp Laws
To avoid penalties and possible criminal sanctions, you
should never try to deflect employees’ workers’ comp claims. You can help
defend your business from such accusations by aggressively tackling all of your
responsibilities under the workers’ compensation law.
You must do the following:
- Obtain workers’ comp insurance or
qualify to become self-insured.
- Provide a workers’ comp pamphlet to
new employees that explains their rights and responsibilities under the
workers’ comp laws.
- Post the required workers’
compensation poster (available at www.dir.ca.gov/dwc/forms.html) in a place
where all employees can see it. Failure to post the poster is a misdemeanor and
can result in a civil penalty of up to $7,000 per violation.
When an injury or illness occurs, you must:
- Provide a workers’ comp claim form
to the affected worker within 24 hours of when the injury or illness is
- Return a completed copy of the
claim form to the worker within 24 hours of receipt.
- Forward the claim form, along with
the employer’s report of occupational injury or illness, to the claims
administrator within 24 hours of receipt.
- Authorize up to $10,000 in
appropriate medical treatment within 24 hours of receiving the claim.
- Provide transitional light-duty
work whenever appropriate.
Practice tip: Failing
to provide workers’ compensation coverage is itself a criminal offense. You
could face a fine of up to $10,000, imprisonment in the county jail for up to
one year, or both—as well as penalties up to $100,000.