Uninsured Employer Liability for Workplace Accidents
In California, all employers must provide workers' compensation insurance for their employees. This insurance covers medical expenses and lost wages if an employee is injured on the job.
If an employer does not have workers' compensation insurance, they may face criminal charges and fines. You also have the right to recover damages directly from the employer to cover the costs of your workplace injuries.
In other words, California state law mandates that every employer purchase workers' compensation insurance from a licensed insurance company or through the State Compensation Insurance Fund (SCIF).
Injured workers will have a more complex legal claim when employers violate this law than just applying for workers' compensation benefits.
At Injury Justice Law Firm, we have experience pursuing claims for injured workers of uninsured employers. We offer free case evaluations and work on a contingency basis, meaning you will only pay fees if we are successful in your claim.
Simply put, you are still entitled to compensation if your employer is uninsured. We can help you identify all potential sources of recovery and take the appropriate action to secure your rights.
Typically, employers are liable to pay your workers' comp benefits directly if they do not have a workers' comp insurance policy. This means that whatever an insurance company provides typically to afford your workers' comp benefits, your employer must afford them independently.
However, collecting damages from an uninsured employer may be easier said than done. So let's consider your options for holding an employer liable if they do not carry workers' compensation insurance.
What Does the Law Say?
California Labor Code 3700 requires all employers to provide workers' compensation insurance coverage for their employees. This includes out-of-state employers who have employees working in California.
Section 3700 says, “Every employer except the state shall secure the payment of compensation in one or more of the following ways:
(a) By being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this state.
(b) By securing from the Director of Industrial Relations a certificate of consent to self-insure either as an individual employer or group employer, which may be given upon furnishing proof satisfactory… to self-insure and to pay any compensation that may become due to their employees.”
If an employer does not have workers' compensation insurance, it is a misdemeanor offense (CLC 3700.5). If convicted, the employer may be subject to criminal penalties, including imprisonment for up to one year and a minimum fine of $10,000.
In addition, if an employer fails to carry workers' compensation insurance, the law gives the injured employee the legal right to sue the employer directly for damages, just as with any other personal injury claim (CLC 3706).
Likewise, if the employee dies from their injuries, their dependents may file a wrongful death claim against the employer.
How Can You Hold an Uninsured Employer Liable?
Suppose you suffered an injury or lost a loved one in the workplace of an uninsured employer. In that case, you can receive benefits through the State Compensation Insurance Fund (SCIF) or by directly filing a claim against your employer.
In other words, suppose you're injured on the job, and your employer doesn't carry workers' comp. In that case, you have some basic options for holding the employer liable, such as the following:
- pursuing the equivalent of workers' compensation benefits from the employer directly;
- filing a civil personal injury claim;
- premises liability claim;
- third-party liability;
- product liability.
If your employer doesn't have the funds to pay the workers' comp, the Uninsured Employers Benefits Trust Fund (UEBTF) will pay your full benefits.
The UEBTF ensures that employees are awarded workers' comp benefits when their employers are unlawfully uninsured, but a separate claim must be filed with the UEBTF to start this process.
How Can You Seek Workers Compensation?
Workers' compensation insurance is designed to cover your medical expenses and lost wages if you're injured at the workplace—but if that insurance is not in place, your employer is legally responsible for covering the expenses that workers' compensation would have paid for.
You would initiate this process by filing a claim against the employer at the workers' compensation court. But, again, an experienced workers' compensation attorney can facilitate this process.
How Can You File a Separate Personal Injury Claim?
Being injured at work automatically entitles you to workers' compensation benefits regardless of who was at fault for the accident.
When the employer is covered by insurance, they are usually protected from civil lawsuits over negligence issues—but if they don't have the insurance, no such protection exists.
Thus, if your workplace accident was caused by employer negligence, you have the right to file a personal injury claim against the employer in addition to the workers' compensation claim. To succeed in a personal injury lawsuit, you must prove that the employer's negligence led to your injuries.
What is the Uninsured Employers Benefits Trust Fund (UEBTF)?
Regardless of your right to collect damages under the law, the reality is that with workers' compensation insurance, your employer may have enough money to compensate you for your injuries and losses.
For uninsured small business owners, even a single workers' comp claim could drive them into bankruptcy—not to mention the fines they will owe the government for not carrying insurance. Nevertheless, you still have options for collecting benefits.
As noted, the State of California has established the Uninsured Employers Benefits Trust Fund (UEBTF) to provide workers' compensation benefits to injured employees while working for an uninsured employer. If your employer didn't carry insurance and you were hurt at work, you can file a claim with the UEBTF.
The UEBTF will then pay benefits to you as if your employer had carried the required insurance. You can file a claim with the UEBTF regardless of whether you also plan to file a civil lawsuit against your employer, but if you do file a civil suit and win a settlement, the UEBTF benefits must be repaid out of that settlement.
It's important to understand that the UEBTF is not an insurance company, and taxpayers do not fund it. The UEBTF is instead financed through penalties levied against employers who violate the law by not carrying workers' compensation insurance.
Filing a claim with the UEBTF is a complicated process best coordinated by an experienced Los Angeles workers' compensation attorney.
You can contact our law firm for a free case evaluation by phone or through the contact form. Injury Justice Law Firm is located in Los Angeles, CA.
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