If an employer fails to carry workers’ compensation insurance, an injured worker can still pursue workers’ compensation benefits directly from the employer. The injured worker can also sue the employer in civil court.
If the case is in California and the employer does not have the funds to pay the injured worker’s benefits, then a state agency, called the Uninsured Employers Benefit Trust Fund (UEBTF), will pay the workers’ compensation benefits.
An injured worker must make a request to the UEBTF to pay benefits if the employer cannot. The materials to send to the UEBTF include:
- Special Notice of Lawsuit to notify the employer
- medical reports documenting the work injury
- medical bills related to the work injury
- proof of employment such as pay stubs or W-2 during the time of injury
- Petition to Join Party Defendant UEBTF
To file a California civil lawsuit, the injured worker must prove that employer did not have workers’ comp insurance at the time of the injury. In a civil case, the employer has the difficult task of proving that there was not a work injury to avoid paying damages. The injured worker has a statute of limitations of three years from the date of injury to file a claim in civil court.
If the injured worker wins a civil lawsuit against the employer, he or she will have to pay back the UEBTF for any benefits it paid in the workers’ compensation case.
The employer can be fined and imprisoned under California law for not having workers’ compensation coverage insurance.
In this article, our California personal injury attorneys will explain:
- 1. Are employers in California required to carry workers’ compensation coverage?
- 2. What are the penalties if an employer fails to carry workers’ compensation?
- 3. Can an injured worker file a claim in civil court?
- 4. Who will pay benefits when the employer cannot?
- 5. How can a worker claim benefits with UEBTF?
- 6. Can an uninsured employer make getting benefits more difficult for an injured worker?
1. Are employers in California required to carry workers’ compensation coverage?
Yes. Every California business owner / employer is required to have workers’ compensation insurance.1 It can be obtained by:
- purchasing a policy from an insurance company
- a certificate from the Director of Industrial Relations that enables the employer to insure itself.2
Example: Joe opens a restaurant. He calls an insurance agent and obtains a workers’ compensation policy with ABC Insurance for his employees.
If Joe pays the premiums, ABC Insurance will handle all his workers’ compensation claims for work-related injuries and pay any benefits due for medical treatment.
When a worker in Joe’s restaurant files a claim, he or she will deal with ABC Insurance. This insurer, not Joe, will determine how to defend the claim and how much to pay in settlement.
Joe’s main role is to determine if the worker can keep working based on medical restrictions given by the treating doctor.
Employers that insure themselves are generally large companies with thousands of workers. A large employer may believe it is cheaper to handle the claims itself than pay an insurance company.
Example: Giant Co. has thousands of workers. Instead of buying insurance, Giant Co. obtains a certificate to self-insure. Giant Co. proves that it has enough money to pay all the workers’ comp claims for medical care that may become due during the policy year.
Giant Co. will need to hire a third-party administrator (TPA) to handle each individual claim.3 When a Giant Co. worker files a claim, he or she will deal with the TPA, but Giant Co. will have the final say in the strategy of each claim and how much to settle for.
An employer that self-insures must provide a security deposit to the state of California to pay workers’ compensation benefits if it fails to pay the benefits itself.4
Employers are required to carry workers’ comp insurance.
2. What are the penalties if an employer fails to carry workers’ compensation?
A California employer that fails to obtain workers’ comp coverage can be penalized by:
- a misdemeanor criminal offense punishable by up to one year in county jail
- a penalty up to double the amount of the premium but not less than $10,0005
The injured employee’s permanent disability will be increased by 10% if the employer has no insurance.6
Once it is determined that an employer has failed to obtain California workers’ compensation insurance, the employer is prohibited from hiring or retaining any employees until it obtains insurance.7
3. Can an injured worker file a claim in civil court?
If an employer does not have workers’ compensation insurance (your job doesn’t have workers’ comp), an injured worker is not limited to just the workers’ compensation court. The injured worker may also file a personal injury claim against the employer in civil court.8
If the employee files a claim in civil court, it is presumed that the employer was at fault. It is the employer’s burden to show that the injury was not its fault. The employer cannot claim the employee was partially at fault for the injury or took on the risk of the job or that it was the fault of another worker.9
To file a civil claim, the employee must prove that the employer did not have workers’ compensation insurance at his or her time of employment.10
Example: Mary is injured at work. When she tells her employer, it does not give her any information about its workers’ compensation insurance carrier.
Mary goes to caworkcompcoverage.com and looks up her employer and her date of injury. The results do not show that her employer had workers’ compensation insurance on Mary’s date of injury.
Mary files a claim for workers’ compensation benefits and a claim in civil court. Once she shows that her employer did not have workers’ compensation insurance, it will be very difficult for the employer to defend the claim.
If an injured worker pursues both a workers’ compensation claim and a civil claim, the employer is can deduct any payments it makes in one court against the other.11 The deduction prevents the injured worker from getting paid twice for the same claim.
The statute of limitations for filing a civil claim is three years from the date of the work injury.12
4. Who will pay benefits when the employer cannot?
Most small employers who are uninsured will not have the funds to pay workers’ compensation benefits themselves. The costs for even a minor claim can be $20,000 to $30,000. One large claim can bankrupt an employer.
The Uninsured Employers Benefits Trust Fund (UEBTF) was created by the state of California to ensure that workers who are employed by illegally uninsured employers can still receive workers’ compensation benefits.13
The UEBTF is not an insurance company. It is a state agency that has funds to pay benefits to injured workers.
If the employee has a civil case and is paid by the UEBTF in the workers’ compensation case, the UEBTF is entitled to be paid back with the money the injured worker recovers in the civil case.14
If the employee files a civil claim, he or she must serve a copy of the complaint to the UEBTF.15
Injured workers cannot claim penalties against UEBTF.16 If there is a delay in benefits administered by an insurance company, the injured worker can get a penalty up to 25%.17
Injured workers may be able to claim benefits from UEBTF – an uninsured employers’ fund – if the employer is uninsured.
5. How can a worker claim benefits with UEBTF?
Claiming benefits with UEBTF is not a simple process under California workers’ compensation law. Part of it is the same process as filing a claim for workers’ compensation benefits. But there are additional steps.
To get benefits through UEBTF, an injured worker should first confirm that his or her employer does not have insurance coverage or self-insurance.
If there is no insurance, the injured worker should put together three identical packets, each including:
- a claim form
- an Application for Adjudication of Claim
- Special Notice of Lawsuit to notify the employer
- medical reports documenting the work injury
- medical expense bills related to the work injury
- proof of employment such as pay stubs or W-2 during the time of injury
- a report that the employer did not have insurance
- Petition to Join Party Defendant UEBTF
One copy of the packet must be sent to the employer with proof of service. A copy must be filed with the Workers’ Compensation Appeals Board to get a hearing date. One copy is for the injured worker to keep.
The claim form and Application for Adjudication of Claim are documents that any injured worker would file whether his or her employer has workers’ compensation insurance or not. The injured worker must request medical reports and bills from his or her treating doctor.
The Special Notice of Lawsuit and Petition to Join Party Defendant are legal documents that bring the employer and UEBTF into the claim.
The report as to whether the employer has insurance is available through the Workers’ Compensation Insurance Rating Bureau (WCIRB).
There is a guide available to assist injured workers in preparing the packet.
By putting together mailing the packet, UEBTF is notified of the claim. UEBTF is not required to pay any benefits until the end of the claim.18 UEBTF can pay Stipulated Award or Compromise and Release to settle a claim.
An injured worker may request that UEBTF pay benefits while the claim is ongoing by sending it a copy of the packet with a letter requesting benefits to the closest office:
UEBTF Claims
1515 Clay St. 17th Floor
Oakland, CA 94612
UEBTF Claims
320 W. 4th St. 6th floor
Los Angeles, CA 90013
6. Can an uninsured employer make getting benefits more difficult for an injured worker?
An insurance company is familiar with the workers’ compensation system. It can pay benefits and efficiently administer a claim.
When there is no insurance, it is difficult for an employer to do this. It will not have the money or understanding of the workers’ compensation system.
An injured worker will have to bring in the UEBTF, but this is a confusing process. It can also cause a delay in benefits.
An injured worker will have to be very diligent in obtaining his or her workers’ compensation benefits and at the same time pursuing a civil claim against the employer.
Call our law firm for legal advice. Our workers’ compensation attorneys offer free consultations.
For help with filing a workers compensation claim in California, completing workers comp forms or appealing a denial of benefits, contact our workers’ compensation lawyers. Our job injury lawyers help police officers, firefighters and other workers to get compensation for their job-related injuries.
Also see California’s Division of Labor Standards Enforcement and Division of Workers’ Compensation (DWC).
For Nevada cases, please visit our page on Nevada employers who fail to carry workers’ compensation insurance.
Legal References
- Cal. Const. Art. XIV, § 4.
- Cal. Lab. Code § 3700.
- Cal. Lab. Code § 3702.1.
- Cal. Lab. Code § 3701.5.
- Cal. Lab. Code § 3700.5.
- Cal. Lab. Code § 4554.
- Cal. Lab. Code §3710.1.
- Cal. Lab. Code § 3706.
- Cal. Lab. Code § 3708.
- Wessell v. Barrett (1944) 62 Cal. App. 2d 374.
- Cal. Lab. Code § 3709.
- Cal. Code Civ. Pro. § 338.
- Cal. Lab. Code § 3716.
- Cal. Lab. Code § 3709.
- Cal. Lab. Code § 3708.5.
- Cal. Lab. Code § 3716.2.
- Cal. Lab. Code §§ 5814, Cal. Lab. Code 4650.
- California Labor Code section 3716.