California Authorities Target Businesses Lacking Workers' Compensation Insurance

March 9, 2005
In a joint effort, state and county authorities earlier this month began an enforcement sweep of Los Angeles County businesses suspected of operating without workers' compensation insurance.

Investigators from the California Division of Labor Standards Enforcement, overseen by the California Department of Industrial Relations, and the Los Angeles County District Attorney's Office Workers' Compensation Fraud Division began the sweep March 1, and the agencies said they expected it to continue through March 8.

"The Division of Labor Standards Enforcement exists to enforce minimum labor standards, including workers' compensation, which is needed to ensure employees are fully protected and working under lawful conditions," said Donna Dell, labor commissioner and chief of the agency. "It is also our goal to protect employers who comply with the law from those who attempt to gain competitive advantage at the expense of their workers by failing to comply with minimum labor standards. The sweep is one method used to enforce labor standards to protect both the employees and compliant employers."

$186,000 in fines in first 3 days

If the early returns are any indication, the enforcement sweep could yield some big busts.

In 34 inspections performed in the first 3 days of the sweep, investigators issued 22 stop orders/penalty assessments totaling $154,000 in assessments, as well as one Notice to Discontinue for failure to obey a stop order. Additionally, there were three cash pay citations with a total assessment of $21,000, one minimum wage citation assessed at $5,600 and one overtime wage citation assessed at $5,500. There were a total of 27 citations issued and one Notice to Discontinue, amounting to $186,000 in total assessments.

"Uninsured employers pose a financial drain on taxpayers and an unacceptable danger to employees," said Supervising Investigator Greg Frum of the Los Angeles County District Attorney's Office. "Therefore, the District Attorney's Office and DLSE remain committed in continuing their wide-range sweep of uninsured employers."

Agencies planned the sweep in February

The District Attorney's Office approached the Division of Labor Standards Enforcement in early February to discuss the possibility of enforcement sweeps targeting employers in violation of workers' compensation requirements. The division agreed that enforcement sweeps were warranted and developed coordinated sweeps designed to ensure that all employers have workers' compensation insurance policies. The Underground Economy Task Force of the Employment Development Department aided in the process by screening employers for the two agencies.

In California, it is illegal to operate a business without workers' compensation insurance for employees. Failure to have insurance carries a mandatory minimum fine of $10,000 and a possible sentence of up to 1 year in county jail.

"We are aggressively pursuing businesses throughout the entire county of Los Angeles who are operating without proof of workers' compensation insurance for their employees," Frum said. "Safeguarding the rights of the employees is the main focus of our sweeps."

Employers in need of more information on workers' compensation can visit the Division of Workers' Compensation Web site at and the Los Angeles County District Attorney's Office Workers' Compensation Fraud Division Web site at

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