Worker’s Compensation Insurance – A Necessity

The failure of an employer to provide such insurance is punishable by civil and/or criminal penalties, including fines and/or imprisonment up to one year. The penalties may be imposed by the Office of Worker’s Compensation (“OWC”) on employers and on individuals who aid and abet employers who wilfully misrepresent that they are in compliance with the statute. An employer “who fails to secure” worker’s compensation insurance – regardless of the reason – “shall be liable” for a civil penalty up to $250 per employee for a first offense and up to $500 per worker for a subsequent offense. [La. R.S. 23:1170(A)]. Such an employer may also be investigated by the OWC, which could result in the discovery of additional violations. The OWC may also seek injunctive relief against an employer with prior offenses to prohibit it from continuing to operate until proof of insurance is provided and all fines are paid in full. La. R.S. 23:1171.1. An employer who “willfully” – i.e., intentionally or through gross negligence – fails to provide insurance is subject to criminal penalties, including a fine of $250 per day and/or imprisonment for up to one year, or both.

Any “person” who “knowingly” makes false or misleading statements or omits/conceals material information “for the purpose of” obtaining compensation coverage or avoiding or delaying payment of compensation premiums may also be subjected to the statutory criminal penalties. La. R.S. 23:1172.2

Lastly, a “knowing” failure to provide insurance together with a failure to pay an OWC “final judgment” for compensation benefits allows the employee to sue the employer in tort for “legal damages.” La. R.S. 23:1032.1. If the employee obtains a judgment in the tort suit as well, he may collect only one of the judgments but is entitled to choose the greater of the two. Although the employer does not have to pay double damages, a second legal action could result in the employer’s incurring substantial attorney’s fees and costs.

Thus, an employer operating in Louisiana must obtain worker’s compensation insurance or State certification of its self-insured status. Failure to do so can result in an employer being subjected to a tort suit and/or adversely affect the employer’s financial condition, goodwill and reputation, and its very ability to continue to conduct business.