Home > Uncategorized > DWC Cheers Prosecution of Businesses; Employee Fraud Not a Concern

DWC Cheers Prosecution of Businesses; Employee Fraud Not a Concern

May 24th, 2013

The Department of Industrial Relations is on a roll with this week’s news releases, an earlier report citing “record-breaking results for labor law enforcement in California” having been issued to the community this week.

Apparently, Labor Commissioner Julie A. Su was excited to report that “labor law enforcement under Governor Brown in the first two years of his Administration resulted in more minimum and overtime wages found owing to California workers and more monetary penalties for illegal business practice than in any previous year in the past decade.”

Strangely, your humble blogger’s “in-box” doesn’t include a report of this administrations hot pursuit of fraudulent claim filers, of workers who harass their employers with fake workers’ compensation claims, or of the crippling effect workers’ compensation costs have on small businesses.

Times are tough enough in California, and more regulations, more compliance laws, and more experts to hire in order to stay out of the ever-growing “underground economy” is not going to bring California’s businesses back from the edge of the abyss.  And looting them with fines and penalties before they have a chance to move to Texas and Arizona isn’t going to solve the problem – you’re feeding the fire, not putting it out.

Certainly some people think of evil fat-cat business tycoons, laughing at their poor workers while they light their cigars with $100 bills aboard private jets (much like your humble blogger and his growing media empire).  They deserve what’s coming to them, and their poor workers are the victims.

In fact, your average violator probably has a handful of employees and is bringing home as much money as they are after trying desperately (and in vain) to comply with California’s Byzantine regulations on every venture imaginable.

Instead of driving the last nails in the coffins of small businesses and then high-fiving itself, perhaps this administration should target the elements that drive small businesses into the “underground economy” in the first place – high workers’ compensation insurance premiums (among other costs of doing business).

Here is an idea – if an employer is the victim of workers’ compensation fraud, that employer should be entitled to a California tax credit for all money that the district attorney’s office was unable (or unwilling) to recover.  That total amount should include the cost of investigation, which is often paid for and conducted by the employer (many prosecutors won’t approach such a case until all the leg work has been done for them).

After all, it’s easy for the prosecutor to plea bargain fraud away by waiving restitution to the employer, and then add another “conviction” to his or her re-election campaign while leaving the employer out in the cold, with no recourse except paying more tax dollars to the same prosecutor.  This way, for every dollar the prosecutors of California fail to recover for the employers, there will be one less dollar coming in next year in tax revenue.

Instead, we have self-pleased “reports” of desperate businesses being ground into the dust to the sound of thunderous applause.

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