In the U.S., workman’s compensation is one of the oldest insurance programs dating back over three decades. California law requires all employers to have workman’s comp, it doesn’t matter whether you have one employee or the employee is part-time, full-time, or seasonal.
There are a few exceptions if the business you run is a single-member LLC, sole partnership, or partnership, and there are no employees. However, workman’s comp is compulsory if you have a roofing business with or without employees. Employers in California need workman’s comp due to the reasons given below.
Criminal Charges
The California Labor Code states that not having a workman’s comp can have you charged with a crime as it is considered a misdemeanor. Being accused of a crime may not be suitable for you in the long term since it can ruin your reputation and affect your future, especially if you are in politics or you’re an investor.
Risk of Imprisonment
Although imprisonment is for extreme cases, failure to provide a workman’s insurance for your employees attracts a jail term of up to one year. Is it worth going to jail for?
Payment of Fines
Fines are not cheap; the law states that the minimum fine is $10000, and the maximum is $100000. The fines you will be charged will cost more than the workers’ comp insurance which shows that it is best to follow what the law states and insure your employees.
To Avoid Shutting Down Your Business
Employers in California can be forced to shut down their businesses if the law enforcers issue a stop order, and an employer can only use or hire a worker once insurance is obtained. An employer must observe the order, failure to which one gets 60 days in the county jail or pay fines of up to $10,000 or both. The order is lifted after you provide workman’s comp for your workers.
To Avoid Being Sued by Employees
Since the Law clearly states that employers should provide worker’s comp coverage to their employees, employees could sue you, and since there are no financial caps on such kinds of lawsuits, settlement costs could be costly. Employers are safer paying for the coverage than civil claim settlements.
To Avoid Responsibility For Employee’s Medical Bills
Workman’s compensation is meant to cater to medical treatment for work-related injuries and sometimes death benefits if a fatality occurs. So if you don’t have coverage for your employees, you would have to incur the costs yourself.
To Avoid Paying More Expensive Coverage
As we mentioned earlier, a workman’s compensation is compulsory by law; even if you find a way to avoid having the coverage, it might be for a short time. When authorities find out, you will have to provide the comp for your company, and insurers are likely to charge you more due to the coverage gap and will categorize you as high-risk.
Summary
As an employer in California, you may think you will save money by trying to avoid workman’s comp, but it is not worth the risk. Repercussions of failing to provide a workman’s comp insurance will cost you more. Getting insurance for your workers is one of the best things you can do for yourself and your workers.
