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Workers’ Compensation: Uninsured Employer


Workers’ Compensation: Uninsured Employer

I’m Ed Smith, a Sacramento workers’ compensation attorney. Some employers illegally fail to carry workers’ compensation insurance. They are hurting themselves and their employees by doing this. Let’s look at what happens when your employer does not have workers’ comp insurance.

California Law

Under California Labor Code Section 3700, all employers in the state must have workers’ compensation insurance. This is true even if there is only one employee. In the corporate setting, directors and corporate officers must also be covered by workers’ comp unless they own the company. In that case, the corporate officers and directors may decide to be exempt. Sole proprietors have a choice of purchasing workers’ comp insurance or abstaining. Workers’ comp coverage can be done

  • by being insured by a company authorized for this purpose in California.
  • by obtaining certification from the Director of Industrial Relations that the employer is able to self-insure for this purpose.

If an employer fails to do this, he or she may be charged with a misdemeanor for the first offense. Penalties include imprisonment for up to 12 months in a county jail and a fine that is equal to twice the amount of premium, which cannot be less than $10,000.  For repeat offenses, the employer will serve up to one year in a county jail and be fined at least three times the amount of the premium or a minimum of $50,000. The employer will also be expected to pay for investigative costs.


One of the questions employees often ask is, “If my employer does not have workers’ comp insurance, what happens to me if i am injured?” The state of California uses two special funds to pay benefits to employees. These are:

  • Uninsured Employers Benefits Trust Fund (UEBTF): This fund is used to pay benefits to employees who were injured on the job or develop a job-related illness. To pay for this fund, a small tax is levied when every workers’ compensation policy is written. The UEBTF uses a lien against the uninsured employer assets to pay the amount back to the fund.
  • Subsequent Injuries Benefits Trust Fund (SIBTF): This fund provides an additional source of compensation to employees who were disabled prior to the most recent injury. In order to qualify for the SIBTF payment, the employee must be rendered permanently disabled by the combination of an injury or illness and their prior disability. This fund supports employers who hire the disabled by freeing them from additional liability.

Risks an Employer Without Workers’ Comp Insurance Faces

There are risks in addition to legal penalties an employer faces. These are:

  • Fines imposed by the California Labor Commission that could reach $10,000 for each employee
  • Business closure
  • Negligent categorization
  • Personal fines
  • Criminal charges
  • Lawsuits by employees who have been injured
  • Application of 10-percent surcharge to be paid to injured party
  • Employee attorney fees

How to File With the Uninsured Employers Benefits Trust Fund

When an employee is injured at work or falls ill due a workplace event, he or she relies on workers’ compensation. If an employer fails to secure workers’ comp insurance, the employee can apply to the UEBTF for compensation. This is a somewhat arduous task and one where the employee may benefit from the assistance of an experienced workers’ comp lawyer’s input.

How Does an Employee Know If an Employer Has Workers’ Comp Insurance?

An employer is obligated to post information about the company’s workers’ comp insurance. This includes contact information for the insurer and policy, including the expiration date. If this information is lacking, an employee can inquire to see how or if the company is insured. It is also possible to check if the employer is self-insured.

Related Articles by Sacramento Workers’ Compensation Attorney Ed Smith:

Sacramento Workers’ Compensation Attorney

I’m Ed Smith, a Sacramento workers’ compensation attorney. When you are injured on the job, you should expect to be covered by workers’ compensation. Sometimes, an employer reneges on this legal responsibility. If this happens to you, you need the assistance of a workers’ compensation attorney. Reach out to me at (916) 921-6400 in Sacramento and (800) 404-5400 nationwide, or you can contact me online. I will give you friendly and free advice.

I’ve been helping residents of Sacramento and Northern California as an injury lawyer for more than 35 years. I’ve been at their side through car accidents and wrongful deaths.

When hiring an attorney, it is a good idea to learn about their practice through the experiences of former clients. Take a look at what my clients have to say about my practice on Avvo, Yelp and Google.

Trial attorneys who have won $1 million for their clients are inducted into the forum. I’m a member from California.

You might be interested in the way I resolved cases in the past. Go to my verdicts and settlements page.

If you are interested in additional information on legal topics, you can access that information here on, a website I own and founded.

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