The Problem of the Uninsured Employer

A laborer on a home construction site falls from a second story platform, suffering serious orthopedic fractures which require air ambulance transport and surgery.  Only after the injury does the injured worker learn that his employer failed to carry worker’s compensation insurance coverage for his employees.  Such a scenario is not hypothetical;  it describes a current case being handled by Janssen Malloy LLP.

California’s Labor Code requires employers to carry worker’s compensation insurance for their employees. Ordinarily, if an employer carries the required worker’s compensation insurance coverage, a worker’s compensation claim is the “exclusive remedy” for the injured worker.  In exchange for worker’s compensation insurance benefits, the injured worker is precluded from suing his employer for his injuries.

But what happens when the employer has falsely certified to the Sate Contractor’s Licensing Board that he has no employees (and therefore is not required to carry any worker’s compensation insurance coverage)?   The employer is then open to a lawsuit by the injured employee for damages, as if the Worker’s Compensation Act did not apply (Labor Code Section 3706).  Civil actions against uninsured employers are not only permitted, but the Labor Code contains special provisions that give an injured employee an advantage over the “normal” tort plaintiff.  In the action against the uninsured employer, it is presumed that the injury to the employee was a direct result and grew out of the negligence of the employer, and the burden of proof is on the employer to rebut the presumption of negligence.  It is not a defense for the employer that the employee was guilty of contributory negligence, assumed the risk of injury, or that the injury was caused by a co-worker.  Therefore, comparative negligence is not available to offset the liability of the employer in proportion to the fault of the employee.  Finally, a judgement against the uninsured employer must include reasonable attorney’s fees, fixed by the court.

Employers who try to skim more profit by not carrying the legally required worker’s compensation insurance coverage do so at great risk.  An injured worker in such a situation should seek competent counsel.  Janssen Malloy LLP is experienced in handling such case and stands ready to assist our community’s injured workers.

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