Some strategies are legitimate—like using a split-classification system (in state's that allow it) for employees whose daily routine involves them in several kinds of tasks. But far too many contractors cut corners in ways that amount to outright fraud. An article at constructiondive.com by Kim Slowey points to several common ways contractors commit worker's comp fraud:
- Paying cash under the table to reduce the total payroll on which worker's comp premiums are based;
- Treating workers as independent subcontractors when they actually meet the criteria for employees;
- Setting up shell companies that look like small sole proprietorships during insurance audits.
In the past, insurance companies conducted most investigations into worker's comp fraud, but now state agencies are getting involved directly, Slowey reports. Regardless of who uncovers the fraud, the consequences will almost certainly include payment of unpaid premiums plus interest and fines, and in extreme cases can result in jail time.
Read more at constructiondive.com