It’s been recently reported in the news that sweeping enforcement of workers compensation laws and rules across the State of California resulted in over 100 contractors being sited with workers compensation violations. Some for conducting fraudulent activities.
- Contractors who did not provide coverage for their employees when required to do so;
- Under reporting of employee payroll;
- Under reporting the number of employees;
- Cash payments or other off the book methods of compensating employees;
- Consider real employees as independent contractors or subcontractors;
- And others.
You might ask…”So what’s the harm?” And the answer is…”A great deal!”
Contractors who operate under the radar or otherwise circumvent the workers compensation system work in an unregulated world. They provide work at unfair lower contract prices than those employers who play by the rules. And they do so at the cost of the protection and safety of their employees!
Consider these points. An off the books contractor may do the same work that a legitimate contractor will but at a much reduced cost because:
- They’re not paying the additional cost of workers compensation insurance;
- They’re not paying the proper payroll taxes on their employees;
- They’re not paying for benefits for their employees;
- They’re not properly protecting their employees!
What’s the point? It’s tough being a contractor. It really doesn’t make much difference in what state you’re working, being a contractor over the past several years has been hard! Many legitimate contractors, those who ran good businesses, who followed the rules and provided for their employees, who didn’t try to short play the system just to make a few extra bucks, are out of business and that’s sad. And mostly due to the depressed economy.
A side note, enforcement is up in most other states too! So expect to see crack downs on contractors and other business owners too as it has recently become a focused effort in many states.
So way to go California! Contractors who don’t play by the rules hurt those legitimate business owners who do! It’s a slap in the face of legitimate business owners to allow these off the books contractors to continue operations.
Hope this helps out! Thanks!