Massachusetts employers with more than a certain number of employees are required to pay for worker’s compensation insurance to cover their employees in the event of work-related injury or illness.
Not all employers follow the law however, and when an employee files a workers’ compensation claim against an employer who has been paying in to workers’ comp insurance, the claim is paid out of a general trust fund. The trust is funded by all of the employers who are properly paying for workers’ comp insurance.
To encourage more compliance among those companies who should be buying workers’ compensation insurance, a bill (S915) is under consideration before the Massachusetts Senate. The bill would make it a felony charge against a company’s owner if the company is required to pay for workers’ compensation insurance, and fails to do so.
According to a news report, there are pros and cons to the passage of the bill.
Supporters of the bill, including the Workers Compensation Advisory Council, maintain that it is unfair for law-abiding business owners to continue to foot the bill for those who aren’t paying in to the system. Also supporting the bill is the New England Carpenters Labor management program. They believe that it may stem the practice of paying workers cash under the table and not paying into the workers’ compensation fund.
Detractors, including the National Federation of Independent Business, claim that increasing the penalty to the felony level is excessive and that a sufficient penalty is already in place.
Current law says that business owners who fail to buy the insurance can be penalized with up to a year in prison or fined up to $1,500. If the senate bill passes, a felony conviction could result in up to five years in jail or a fine of up to $10,000.
The passage of the bill would make the penalty for failure to pay workers’ comp insurance the same as the penalty for workers’ compensation fraud.
Source: Boston Herald, “Workers’ compensation failure a felony under bill before Senate,” Shira Schoenberg, April 15, 2012