For most businesses, workers’ compensation coverage is required to comply with state law. The majority of businesses purchase coverage or are self-insured and maintain protection for their employees. However, some businesses begin or continue operations without workers’ compensation coverage in place.
Noncompliance or coverage lapses may be unintentional. Businesses in their initial startup receive lots of information from local, state, and federal agencies and workers’ compensation requirements are often included. Coverage requirements maybe overlooked, consciously or mistakenly by the owner.
Noncompliance by improperly classifying workers or allowing a coverage lapse may be intentional. Businesses may do this to avoid or reduce the cost of coverage. Common activities can include providing fraudulent Certificates of Insurance (COIs), non or under-reporting of payroll, using inaccurate class codes, classifying workers as independent contractors not employees, or simply failing to provide the coverage required by law. These activities have both direct and indirect costs for workers, other businesses, insurers, government agencies, and society.
The IAIABC will develop a task force to address issues related to coverage compliance and identify jurisdictional solutions that have been effective in reducing non-compliance with coverage requirements including misclassification, fraud, and uninsured employees. To accomplish this, the task force will:
Collect information on jurisdictional efforts to address non-compliant or fraudulent activities in the policy acquisition process and in the premium audit process.
Collect information on jurisdictional efforts that have not been as successful as desired and the underlying reasons for less than desired results.
Share success stories on effective strategies and programs
Promote jurisdictional action by connecting them with peers who have active programs to deal with workers’ compensation coverage fraud.
Develop innovative solutions.
Possible strategies to explore include jurisdictional misclassification task forces, inter-agency data sharing, state fund programs, construction premium fraud efforts and stop-work orders, union presentations and tips, criminal prosecutions, and technology solutions.
The task force will organize a half-day working session at The Forum 2020 to bring together jurisdictional representatives and industry experts to discuss challenges and solutions to obtaining compliant workers’ compensation coverage for all employees.
In addition, the task force will organize a program highlighting effective solutions for the 106th Convention. The task force will develop a summary report to share findings and present opportunities for progress by the industry.
This is a limited-term task force, actively working January through December 2020. The task force has been filled for 2020 but please contact the IAIABC if you have any questions about it.