Save for a few exceptions, employers in every state (sans Texas) are required to carry workers' compensation insurance. Unfortunately, some companies don't want to go to the trouble of or spend the money getting this insurance, which often leaves injured employees with unpaid medical bills and other problems after an on-the-job accident. Here are two signs your employer may be committing workers' comp fraud so you can take the appropriate steps to force the company to comply with the law.
Only Pays in Cash
One sign your employer may be underinsured or not have workers' compensation insurance altogether is he or she pays you in cash or using methods that obscure where the money comes from (e.g. checks from a shell account). Doing this accomplishes two things.
First, it lets the company underreport the actual number of employees it has. The employer may be trying to get a lower premium from the insurance provider, which means the company is likely underinsured. However, in some states, employers are only required to get workers' compensation insurance if they have a certain number of employees (e.g. five or more in Missouri). Second, paying in cash also lets the employer avoid paying certain taxes (e.g. FICA), which may better help them hide the fact it doesn't have the required insurance.
Ask your employer why he or she pays you in cash or—if you don't want to be confrontational—ask for a paycheck stub. If your employer gives an excuse that doesn't seem to add up, he or she may be engaged in some type of fraud.
Tries to Misclassify Your Position
Another popular way employers avoid buying workers' compensation insurance is by misclassifying their employees. Certain types of people are not covered by workers' compensation. The most well-known are independent contractors, people who do work for the company but are not official employees. However, seasonal or casual, domestic, volunteer, and farm workers are also typically exempt from coverage.
One tell-tale sign your employer has misclassified you is he or she doesn't collect any employment taxes on your behalf. Another sign is the employer may attempt to distance the company from you in some way. For instance, your employer may require you to buy your own tools because that's one thing the IRS looks at when determining whether a person who works for the company is an employee or an independent contractor.
As noted previously, workers' compensation fraud can lead to serious financial consequences for you if you're ever in a workplace accident. Each state typically has a hotline you can call to anonymously report your employer, which you can find by searching online.
If you have been in an accident and discovered there is no coverage, contact an attorney as soon as possible to explore your options for getting compensated for your damages and losses. Contact a firm like Rizzi Law Group to learn more.