In April, the California Contractors State License Board (CSLB) led a sting operation designed to catch contractors working without a license or carrying workers compensation insurance. Agents pretended to own a home in the Liberty Park area of the city. They invited contractors to bid on various improvement projects in the house. The bids ranged from $950 to $4,200.
Agents allegedly discovered that nine of the people who put in bids had no workers’ compensation insurance coverage for their workers. As is the case with most states, in California, all employers are required to carry workers’ compensation insurance coverage. Coverage provides benefits including disability benefits, medical care, a return-to-work supplement, and even death benefits.
The cost of workers compensation insurance varies dramatically depending on the industry. Effective January 1, 2019, the rate for an office employee ranges from $0.28 to $0.99 per $100 of payroll. For painting contractors, the range is from $8.83 up to $38.66. The most expensive rates are those for roofing contractors, which begin at $23.06 but go all the way up to $87.83. Businesses tend to pay the higher rates if they are newer or if they have had several claims made against them.
I have reported on cases from across the country where companies have attempted to avoid paying the correct rate of workers’ compensation insurance in order to keep their overheads down. Jose Sanchez, a contractor in upstate New York fraudulently claimed his business had no employees. An investigation by the Office of the Inspector General revealed that Sanchez, in fact, had several employees. After working on a project in the city of Amsterdam, Sanchez was arrested and is now awaiting trial.
In Massachusetts, meanwhile, Anner Valentin Amaya underreported the wages he paid and also the number of people he employed in order to pay a reduced rate of workers’ compensation insurance. Amaya was charged with 12 felony counts including five of Workers’ Compensation Fraud.
The nine suspects from Bakersfield have been cited and, according to CSLB, may face the misdemeanor charge of contracting without a license. If convicted, first-time offenders face up to $5,000 in fines and six months in jail. One of the suspects, Jeffrey S. Anderson, faces an additional charge—the felony charge of using a contractor license number illegally. His license expired seven years ago. Anderson faces a year in jail and a $10,000 fine.
It is illegal in California for an individual who is not licensed to carry out contracting work on a project which comes to more than $500—a total which includes both materials and labor. During the CSLB operation, agents discovered 18 individuals who allegedly placed bids over this total.
This is not the first time in the recent past the CSLB Statewide Investigative Fraud Team (SWIFT) have carried out a sting operation in California. In September 2018, 14 individuals were caught in an operation in Bakersfield while another 15 were netted during a sting in Lompoc near Santa Barbara. In February 2018, a further 15 people were caught, also in Bakersfield.
Florida Workers’ Compensation Fraud Defense Attorney
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