The Department of Industrial Relations (DIR) will not accept certificates of workers’ comp insurance from American Labor Alliance and CompOne USA. The move came as the result of multiple questions from Workers’ Comp Executive.
The California Department of Insurance, last week in a ruling, determined that American Labor Alliance, CompOne USA, Agricultural Contracting Services Association and their leader Marcus Asay has been selling workers’ compensation “coverage” illegally in California.
Stop Work / Shut Down Orders May Come
Employers who bought workers’ comp coverage from these firms “do not have policies that meet the requirement to provide coverage and must purchase from a licensed company,” DIR says flatly. Those employers are subject to an immediate stop work order until they obtain proper coverage.
Company’s operating without valid workers’ comp coverage are also subject to fines of $1,500 per uninsured worker. Additionally, DIR notes that they can be subject to jail time and $10,000 in additional penalties.
There are hundreds of these companies according to Compline which has the list.
Standard Coverages Missing
According to independent legal experts, employers operating without statutory workers’ comp coverage may not have the protection of California’s sole and exclusive remedy law. Injured workers, therefore, could bring damages cases against employers asserting all sorts of claims such as negligence. Such complaints from employees are excluded from all Commercial General Liability policies, according to experienced brokers.
CDI: “Coverage” Isn’t Statutory Coverage
The California Department of Insurance itself had been reluctant to issue a blanket declaration that all policies issued by these firms were invalid, but in response to questioning from Workers’ Comp Executive indicated as much on Friday. We asked, “Under what circumstances could a workers’ comp policy sold and issued by a non-licensed entity be valid workers’ comp coverage in California?”
The response from a CDI official: “A [properly licensed] self-insured entity is the only example I received.”
ALA and the various entities are not now and have never been licensed by the Department. CDI is urging employers with policies from these companies to contact its investigations division at 661-253-7500.