In many industries there are disreputable small business owners that are notorious for workmen's compensation fraud, where they either withhold the monies and then pocket it, or never pay the actual premiums and allow it to revert back into their cash flow. At first glance, something like this seems like such a criminal act, that folks would want them barred from owning a business for life and thrown in jail.

Of course, there is a secondary consideration to all this. That is that there is so much workmen's compensation fraud on the other side of the equation that the rates have become unbearable and the small businesses really cannot afford them and continue to remain an on-going, viable, and profitable endeavor. Workers are constantly filing fake claims and this raises premiums until the little business guy just can no longer afford it.

Case in point perhaps is the California Department of Insurance and their proposed increase of 23.7% according to the Workers' Compensation Insurance Rating Bureau if the laws are passed, which could cause some small businesses to find their coverage expiring in the middle of a recession. Worse, if the companies try to re-up somewhere else, with another insurance company they can expect to pay the higher rates.

So, what is a California company to do? One option is to leave the state, another is to go out of business and lose everything. And the last option for many is to fail to pay for it, hope things get better, and get thrown in jail for failure to pay or for operating a business without it.




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