A California roofing contractor was sentenced recently to one year in jail and was ordered to pay $510,000 in restitution for failing to provide workers compensation insurance for an injured employee and failing to pay insurance premiums for unclaimed employees, who were paid in cash.
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At the time of the crime, Holley was a roofing contractor and owner of So Cal Roofing. The defendant purchased a minimum workers compensation policy from SCIF and failed to state that he employed subcontractors, paid workers in cash, hired unlicensed employees, and leased employees from other companies. Holley paid his employees in cash to hide the fact that So Cal Roofing had workers. He received insurance based on his false declaration and entered into a contract requiring SCIF to cover all workers employed by Holley, even those employees unknown to the insurance company. Holley submitted inaccurate payroll reports to SCIF, resulting in underpayment of insurance premiums. To hide the fraud, Holley failed to file an accurate tax return to avoid paying taxes to the State on the cash payments made to his employees.
One of Holley’s employees was injured when he fell off a roof, and subsequently filed a workers comp insurance claim. Holley denied that the injured employee worked for him, thus denying the injured employee his workers comp insurance benefits. Subsequently, Holley fraudulently signed under penalty of perjury that he had no employees at So Cal Roofing and filed these documents with the California State Contractor’s Licensing Board to make him exempt from securing workers comp insurance.
California law requires that all employers maintain workers comp insurance for their employees. Payroll records showing the number of employees and their incme must be submitted to both the workers comp insurance company and EDD, who oversee the collection of payroll taxes.
Author Robert Elliott, executive vice president, Amaxx Risk Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He is an editor and contributor to Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: [email protected].
WORKERS COMP MANAGEMENT MANUAL: www.WCManual.com
MODIFIED DUTY CALCULATOR: www.LowerWC.com/transitional-duty-cost-calculator.php
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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