Business Journal: Worker's Comp Costing

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(Sacramento, CA)
Tuesday, August 14, 2007
State law requires all employers have workers’ comp insurance. The premiums are based on a percentage of wages. But they also vary by job classification – the more risky the job, the higher the premiums.
The study found that California employers might be underreporting up to 75 percent of their payroll for those risky jobs. Instead of classifying the workers as high-risk, some employers report them as low-risk, thereby greatly decreasing the amount they must pay. That translated to $100 billion in underreported payroll in 2002, the most recent data available. Because of this, honest employers pay rates as much as eight times higher.
Advocacy group Small Business California is sponsoring legislation to expand the state’s ability to find employer fraud. The bill would compare payroll to other data gathered by state agencies such as the Employment Development Department.