The California workers’ compensation system is designed to protect both employees and the employers. One way it accomplishes this is to require almost all employers to carry workers’ compensation insurance. In the event that an employee makes a workers’ compensation claim, the insurance company will be the one to pay out the benefits to the employer and medical provider, not the employer. This protects the employer’s bottom line while also making sure that the employee also receives the benefits that he or she is entitled to after sustaining a work-related injury. Despite the fact that California law provides serious repercussions and penalties for employers who fail to carry workers’ compensation insurance, some employers still fail to carry it. The Uninsured Employers Benefits Trust Fund (UEBTF) can then help provide the compensation required.
The UEBTF was set up in 1971 to make sure that even if an employer illegally fails to carry workers’ compensation insurance, he or she will still be properly cared for and receive the appropriate wage replacement or other benefits he or she may be entitled to under California law. The UEBTF benefits the uninsured employer because it means that the employee still will not be able to directly sue the employer for his or her work-related injuries, as the injuries will still be compensated under the no-fault system established through workers’ compensation. To receive compensation from the UEBTF, an injured employee must first go to the Workers’ Compensation Appeals Board to request a judgment for uncompensated injuries. Once that occurs, he or she can then apply for benefits from the UEBTF.
After an employee receives compensation from the UEBTF, the process is not finished. The UEBTF can and will seek to recover the benefits paid for the employee directly from the employer. The UEBTF uses the funds recovered from illegally uninsured employers to help continue to fund the UEBTF. Because the employer will not always have the cash on hand to reimburse the UEBTF for the benefits paid out, the UEBTF will typically seek to place liens on the assets and property held by the business. Moreover, the UEBTF can seek to place liens on substantial shareholders of the business.
We have extensive experience helping our clients to understand the repercussions of failing to carry the required workers’ compensation insurance. Call us today for a consultation.