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HomeLabor CodeDiv. 4Pt. 1Ch. 4Art. 2§ 3722 Uninsured Employer Penalties

§ 3722 Uninsured Employer Penalties

Labor Code·California
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§ 3722 Uninsured Employer Penalties

Key Takeaways

  • •If a boss doesn't have workers' compensation insurance, they can get fined $1,500 for each worker they have when they get caught.
  • •If the boss was uninsured for more than a week in the past year, they might have to pay either double what they should have paid for insurance or $1,500 per worker, whichever is more.
  • •If a worker gets hurt and the boss doesn't have insurance, the boss could pay $2,000 per worker if the injury isn't covered or $10,000 per worker if it is covered.
  • •The boss has to tell the truth about how many workers they have, or the state will guess and it might cost them more.

Example

A small restaurant owner doesn't buy workers' compensation insurance for their 5 employees. One day, an employee slips and breaks their arm while working.

Since the restaurant owner didn't have insurance, they could be fined $10,000 for each of their 5 employees because the injury happened at work. That means they would have to pay $50,000 in fines.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 3722 Uninsured Employer Penalties

(a) At the time the stop order is issued and served pursuant to Section 3710.1, the director shall also issue and serve a penalty assessment order requiring the uninsured employer to pay to the director, for deposit in the State Treasury to the credit of the Uninsured Employers Fund, the sum of one thousand five hundred dollars ($1,500) per employee employed at the time the order is issued and served, as an additional penalty for being uninsured at that time or issue and serve a penalty assessment order pursuant to subdivision (b). (b) At any time that the director determines that an employer has been uninsured for a period in excess of one week during the calendar year preceding the determination, the director shall issue and serve a penalty assessment order requiring the uninsured employer to pay to the director, for deposit in the State Treasury to the credit of the Uninsured Employers Fund, the greater of (1) twice the amount the employer would have paid in workers’ compensation premiums during the period the employer was uninsured, determined according to subdivision (c), or (2) the sum of one thousand five hundred dollars ($1,500) per employee employed during the period the employer was uninsured. A penalty assessment issued and served by the director pursuant to this subdivision shall be in lieu of, and not in addition to, any other penalty issued and served by the director pursuant to subdivision (a). (c) If the employer is currently insured, or becomes insured during the period during which the penalty under subdivision (b) is being determined, the amount an employer would have paid in workers’ compensation premiums shall be calculated by prorating the current premium for the number of weeks the employer was uninsured within the three-year period immediately prior to the date the penalty assessment is issued. If the employer is uninsured at the time the penalty under subdivision (b) is being determined, the amount an employer would have paid in workers’ compensation premiums shall be the product of the employer’s payroll for all periods of time the employer was uninsured within the three-year period immediately prior to the date the penalty assessment is issued multiplied by a rate determined in accordance with regulations that may be adopted by the director or, if none has been adopted, the manual rate or rates of the State Compensation Insurance Fund for the employer’s governing classification pursuant to the standard classification system approved by the Insurance Commissioner. The classification shall be determined by the director or the director’s designee at the time the penalty assessment is issued on the basis of any information available to the director regarding the employer’s operations. Unless the amount of the employer’s payroll for all periods during which the employer was uninsured within the three-year period is otherwise proven by a preponderance of evidence, the employer’s payroll for each week the employer was uninsured shall be presumed to be the state average weekly wage multiplied by the number of persons employed by the employer at the time the penalty assessment is issued. For purposes of this subdivision, “state average weekly wage” means the average weekly wage paid by employers to employees covered by unemployment insurance as reported by the United States Department of Labor for California for the 12-month period ending March 31 of the calendar year preceding the year in which the penalty assessment order is issued. (d) If upon the filing of a claim for compensation under this division the Workers’ Compensation Appeals Board finds that any employer has not secured the payment of compensation as required by this division and finds the claim either noncompensable or compensable, the appeals board shall mail a copy of their findings to the uninsured employer and the director, together with a direction to the uninsured employer to file a verified statement pursuant to subdivision (e). After the time for any appeal has expired and the adjudication of the claim has become final, the uninsured employer shall be assessed and pay as a penalty either of the following: (1) In noncompensable cases, two thousand dollars ($2,000) per each employee employed at the time of the claimed injury. (2) In compensable cases, ten thousand dollars ($10,000) per each employee employed on the date of the injury. (e) In order to establish the number of employees the uninsured employer had on the date of the claimed injury in noncompensable cases and on the date of injury in compensable cases, the employer shall submit to the director within 10 days after service of findings, awards, and orders of the Workers’ Compensation Appeals Board a verified statement of the number of employees in his or her employ on the date of injury. If the employer fails to submit to the director this verified statement or if the director disputes the accuracy of the number of employees reported by the employer, the director shall use any information regarding the number of employees as the director may have or otherwise obtains. (f) Except for penalties assessed under subdivision (b), the maximum amount of penalties which may be assessed pursuant to this section is one hundred thousand dollars ($100,000). Payment shall be transmitted to the director for deposit in the State Treasury to the credit of the Uninsured Employers Fund. (g) (1) The Workers’ Compensation Appeals Board may provide for a summary hearing on the sole issue of compensation coverage to effect the provisions of this section. (2) In the event a claim is settled by the director pursuant to subdivision (e) of Section 3715 by means of a compromise and release or stipulations with request for award, the appeals board may also provide for a summary hearing on the issue of compensability. (Amended by Stats. 2009, Ch. 640, Sec. 1. (SB 313) Effective January 1, 2011. Note: Because Ch. 640 was chaptered on November 2, 2009, its effective date is January 1, 2011, not January 1, 2010.)

Last verified: January 21, 2026

Key Terms

penalty assessment orderUninsured Employers Fundworkers’ compensation premiumsuninsured employer

Related Statutes

  • § 3711 Employer Insurance Verification Requirement
  • § 3716.2 Uninsured Employers Fund Payments
  • § 3716.3 Director Foreclosure Enforcement
  • § 3717.1 Uninsured Employer Corporate Liability
  • § 3718 Uninsured Employers Fund Actions

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Labor Code. Section 3722.
View Official Source