If an employer fails to purchase workers’ compensation coverage and comply with the law, then an injured employee may sue the employer for the benefits required under the Workers Comp Law or may bring a tort action against the employer. In a tort action, the employee would have the possibility of recovering substantially more than is provided under the workers comp law. This possibility is substantially increased because as a penalty for the employer’s failure to secure compensation, the employer loses the right to defend against liability based on certain common law defenses which are normally available in lawsuits. The employer may not escape liability by claiming that the employee was injured due to the negligence of a fellow employee, or to the employee’s own negligence, or that the employee assumed the risk of injury by accepting employment. The employee would also be able to sue for noneconomic damages, such as pain and suffering, which are not compensated under workers’ compensation law. In addition to being sued, an employer can actually be prevented, by a court injunction, from conducting business until such time as payment of compensation is secured. The power to seek an injunction against an employer is granted to the Workers Compensation Division. Before seeking an injunction, the Division must first give the employer an opportunity to show evidence of coverage. If the employer cannot, the Department shall assess a penalty of $1,000 per day.
The Division is also required to notify the appropriate contractors’ licensing board if it finds a construction or electrical contractor in violation of the law.