If you are an employer, you are undoubtedly familiar with high workers’ compensation rates. As you strive to keep your overhead low and eke out a profit, it can feel like a burden to pay these rates. It may be tempting to take creative steps to avoid paying for this coverage. In fact, a small industry has arisen to capitalize on employers’ frustrations with these high costs. You may be confronted by someone from this industry who offers to help you skew your payroll figures so that you can pay less for workers’ compensation. Our advice? Run away. Though this may seem like a tantalizing idea, it will backfire and could cost your company a fortune.
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In most states, the very application that you sign in order to obtain workers’ compensation coverage articulates that you will be charged with a felony for providing false or incomplete information to get out of paying the full amount for workers’ compensation. You may think that you can finesse the numbers on the sly, but when it comes time for your workers’ compensation audit, your attempts to cook the books can be easily discovered.
And though the legal ramifications alone should be enough to keep any company from perjuring itself, there are significant monetary consequences as well. Most states impose steep financial penalties that total many times the amount that you may have saved by cutting corners with your coverage. You will also be responsible for paying court costs.
Your financial penalties won’t end there. Once your scheme has been uncovered, you will not be eligible for workers’ compensation until you pay your fines in full. In the meantime, most states will slap on a penalty every day that your business operates without workers’ compensation coverage. Thus, even as you are trying to work your way out from under steep penalties, you will be incurring more penalties.
Dishonesty will catch up with you in the end. The amount that you have saved by skimping on workers’ compensation will seem like a pittance in the face of the legal and financial punishments that you face.