“Help! My employer doesn’t have workers’ compensation insurance. Now what?”
Arizona law requires most employers, even those with only 1 employee, to carry workers’ compensation insurance. There are penalties for not having this insurance—severe penalties for the delinquent employer and de facto penalties for employees.
Workers’ compensation benefits include restoration of lost income, compensation for qualified work-related medical and rehabilitation treatment and death benefits to employees and their dependents.
In Arizona, this is a no-fault insurance system, meaning that benefits are paid regardless of whether the employer or the employee is at fault. The system isn’t perfect. For example, certain damages are not covered—notably pain and suffering. However, it acts as a vital safety net for many injured folks and their families.
Sometimes, however, employers fail to carry workers’ compensation insurance altogether.
What if your employer doesn’t have workers’ compensation?
If you’re hurt on the job and discover your employer doesn’t have workers’ comp insurance, you might feel as though you’ve run out of options. But this is not necessarily true. In this scenario, hiring an experienced Arizona workers’ compensation attorney is essential.
Consequences for the employer
If an employer is required to carry workers’ compensation insurance but doesn’t, Arizona Revised Statutes §23-961 provides a few ways they can secure that obligation.
For starters, some employers can “self-insure” when it comes to workers’ compensation. However, that option is effectively restricted to very large employers that meet the following requirements:
- They show proof of financial ability.
- They can be a member of an approved workers’ compensation pool of employers.
- The Industrial Commission of Arizona (ICA) will probably require a deposit of at least $100,000.
If your employer has no coverage at all, they can be charged with a Class 6 Felony. This is a lower-level class of felony possibly with a prison sentence from 4 months up to 2 years. The employer can also be charged with a misdemeanor.
Usually, an employer’s failure is punished by a fine from the ICA. The fine can range between $1,000 and $10,000, depending on the number of violations. In addition, the ICA can file with the courts for an injunction that effectively closes down a seriously delinquent employer’s business.
What recourse is available for injured employees?
The injured employee can also file a civil lawsuit against the uninsured employer for damages. Defending against a civil lawsuit can be very expensive for an employer. Moreover, an uninsured employer can be liable for more damages than those covered by workers’ compensation insurance.
If the injured employee gets compensation from the ICA Special Fund program, then the ICA can sue the employer to recover the Special Fund payout, plus a 10 percent premium. If a delinquent employer does eventually get required insurance coverage, they will probably be penalized with higher premiums.
Employer’s failure to comply
If you are injured on the job (or become ill due to your work) and your employer doesn’t have workers’ compensation insurance, you have some options.
For starters, you can file a civil lawsuit against the employer or sue a third party who is responsible. In a civil lawsuit, you must show:
- The defendant’s duty of care,
- The defendant’s negligent or intentional failure to satisfy that duty of care,
- That defendant’s failure is a cause of your injury or illness, and
- The amount of damage or loss you suffered.
The good news is that the damages to which you are entitled can exceed that which you would get under workers’ compensation since certain non-economic compensation (such as pain and suffering) is not available under workers’ comp but is available in a civil lawsuit. However, if an employer does not have enough funds to buy workers ’compensation insurance, they may not have the funds to purchase liability insurance. This would render a judgment in the civil suit meaningless.
When to consult an Arizona workers’ comp attorney
If you are injured or fall ill on the job, you should contact an experienced workers’ compensation lawyer immediately—whether or not your employer carries insurance. Workers’ compensation claims can be full of pitfalls that can be avoided if your lawyer is brought in early on.
It’s even more important that you retain a lawyer if your employer fails to carry insurance or the negligence of a third party is responsible for your loss. In addition, if you want to claim damages not covered by insurance, you will need to file a civil suit in the proper court. Early involvement of an experienced workers’ compensation attorney is essential.