Employers and Insurance Brokers Beware – Falsifying workers compensation information can land both in prison

On April 5, 2013, a Tulare County criminal grand jury indicted eight local businessmen on suspicion of workers’ compensation insurance premium fraud and payroll tax evasion. In the indictment, the individuals were collectively charged with 50 counts of making fraudulent misrepresentations to private insurance carriers, the State Compensation Insurance Fund (SCIF) and the California Employment Development Department (EDD.) Believed to be the largest case of its kind in California, the total fraud committed is estimated to be in excess of $39,000,000. All were indicted for falsifying payroll reports and tax returns with the intent to lower their workers’ compensation insurance premiums and payroll tax liability. An insurance broker who allegedly helped with the scheme has been charged in the indictment with making material misrepresentations to insurance carriers with the intent to secure lower premiums for their client. The Office of the District Attorney’s Bureau of Investigations, Financial Crimes Division, served arrest warrants on all eight defendants following the presentation of the indictment. The defendants were arraigned on Friday, April 12th in Tulare County Superior Court in Visalia. Guardian HR constantly works with its clients to educate and advise on the importance of proper classification of employees whether that be a determination of whether someone is an employee or independent contractor or exempt or nonexempt. Misclassifications can lead to disastrous outcomes. Contact your Holman HR Dedicated HR Consultant for help with this or any other human resource and employment law matter.