California DIR Targets Employers Who Fail to Carry Workers’ Comp Insurance

The California Department of Industrial Relations (DIR) launched the Insurance Coverage Program, an enforcement program designed to identify and target employers who fail to carry workers’ compensation insurance.

“Through this new enforcement program we will be able to systematically identify unlawfully uninsured employers to prioritize as enforcement targets,” said DIR Director John C. Duncan. “By partnering with other agencies we are leveraging our resources to seek out illegally operating employers and to level the playing field for those who follow the laws.”

Under California law, all employers are required to purchase workers’ compensation insurance or file a certificate to self-insure. The DIR’s Division of Labor Standards Enforcement (Labor Commissioner’s Office) is charged with identifying and targeting violators. Senate Bill 869, signed into law by Governor Schwarzenegger in 2007, authorizes DIR to use funds from the Workers’ Compensation Administration Revolving Fund for the enforcement of the Insurance Coverage Program. Any penalties collected during the enforcement process will be credited back to the special fund.

Through an agreement developed among the agencies, employers without workers’ compensation insurance may be identified by matching data from the Employment Development Department, Uninsured Employers’ Fund, rating agencies licensed by the Insurance Commissioner, and other sources. The new law also requires the Labor Commissioner to create and post annually by March 1 a report on the division’s Web site.

“Employers who do not cover their employees with workers’ compensation insurance impose a burden on injured workers, other employers and taxpayers,” Duncan added. “By operating illegally, these employers gain an unfair advantage in the marketplace and we will not allow that to continue.”

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