Employers Who Misclassify Workers in Massachusetts Can Face Criminal and Civil Penalties for Workers’ Compensation Fraud

In Massachusetts, workers’ compensation fraud reportedly costs insurers over $100 million per year. According to the Massachusetts Insurance Fraud Bureau (“IFB”), too many employers lie about the number of workers they employ or misclassify employees in an effort to reduce their required workers’ compensation premiums. The IFB claims that such employers are normally quick to acknowledge an employee relationship exists if a misclassified worker sustains a job-related injury.

A recent Massachusetts Department of Industrial Accidents study found that up to one-quarter of a million workers are misclassified across the Commonwealth. In addition, about 13 percent of employers in Massachusetts misclassify some employees. Over the course of 2013, the Department of Industrial Accidents investigated about 6,000 businesses over their workers’ compensation insurance coverage. As a result, more than one-third of the companies were ordered to stop work, and about $1.3 million in fines were issued. In addition, at least 6,000 Massachusetts workers were added to the businesses’ workers’ compensation insurance policies.

A report published by Harvard Law School found that nearly 15 percent of construction workers in the Commonwealth are misclassified as independent contractors in an apparent effort to reduce workers’ compensation insurance premiums. Some employers also misreport the level of job risk faced by employees in order to cut premium costs. In 2012, the IFB investigated nearly 400 insurance fraud allegations. About 10 percent of those cases resulted in the payment of nearly $300,000 in restitution for workers’ compensation insurance fraud. Additionally, seven people were convicted in connection with the purported fraud, and three other individuals were charged with related crimes. During the same year, a state agency task force also collected over $21 million in lost tax revenues that resulted from Massachusetts workers’ compensation insurance fraud.

In Massachusetts, employees may not directly sue their employer for any pain and suffering that results from a workplace accident. Instead, employers across the Commonwealth are required to carry “no fault” workers’ compensation insurance designed to protect employees who suffer a debilitating injury or disability at work. In general, workers’ compensation benefits include both medical expenses and lost wages. In situations where a worker’s harm prevents him or her from returning to a specific occupation, an injured employee may also be entitled to receive the costs associated with vocational training. If a worker is tragically killed in a workplace accident, his or her surviving spouse and any dependents may be entitled to collect financial compensation under Massachusetts workers’ compensation laws.

If you were injured in a Massachusetts workplace accident, you may be entitled to receive workers’ compensation disability or other benefits.  To discuss your situation with a seasoned Boston workers’ compensation attorney today, contact the caring workers’ compensation lawyers at Kantrovitz & Associates, P.C. through our website or give us a call at 800-367-0871.

Additional Resources:

MA Worker’s Comp Fraud Costs $100 Million, by Patrick Sargent, GoLocal Worcester