Is Your Employer Committing Workers’ Compensation Fraud

A recent post in the North Carolina Workers’ Compensation Journal discusses a significant problem in some industries – workers’ compensation fraud by employers.  Not only is this a serious problem within certain industries, it is a growing problem during difficult economic times.  The post in the North Carolina Workers’ Compensation Journal lists 14 signs that your employer may be committing workers’ compensation fraud.  Although the post is written for workers in North Carolina, many of the signs are also applicable in Alabama.  Like North Carolina, Alabama also has a state agency that is supposed to monitor compliance with the law.

Why is this a serious problem?  As the post’s author Len Jernigan notes:

These signs may indicate that your employer is not paying workers’ compensation insurance for their employees.  If they aren’t, this could put you in a very difficult situation if you are ever injured on the job.

Under Alabama law, an employer is subject to serious penalties for not having workers’ compensation insurance.  For your claim, a court in Alabama can even impose a penalty doubling the benefits owed you.  However, it does not matter how great the benefits and penalties if they are not collectible.  That is often the case when employers do not have proper coverage.  Here are the signs Len believes may indicate that your employer is engaged in workers’ compensation fraud:

  1. They pay you in cash and don’t give you any kind of payroll stub.
  2. They give you a 1099 form instead of the standard W-2.
  3. They pay you other than in cash or check, by such things as free rent, reimbursement of expenses, barter, etc.
  4. They pay you on a piecework basis and do not record hours.
  5. They require you to work long hours but turn in fewer hours than you actually worked.
  6. You or somebody you know is injured on the job, and the employer promises to pay the medical bills rather than reporting the accident to the North Carolina Industrial Commission (the Department of Industrial Relations in Alabama).
  7. The reported hours on an injured worker’s accident report do not match the hours the employer reported to the North Carolina Industrial Commission (the Department of Industrial Relations in Alabama).
  8. You or somebody you know finds that they do not qualify for unemployment insurance because the employer under-reported your hours.
  9. They submit bids on jobs that are well below the industry standard.
  10. They do not maintain or report complete and accurate employee payroll information.
  11. They are operating a business without the proper license or registration and have workers.
  12. They have a large number of corporate officers listed for the firm, and all work at the firm.
  13. They hire their own children to work for the firm (other than on a family farm).
  14. They have several “corporate officers” who do not exercise control of the business operations.



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