What happens if my employer does not have workers' compensation insurance?

Arizona law requires employers to provide workers' compensation insurance for their employees. However, some employers operate without the required coverage. When an employee is injured while working for an uninsured employer, they can choose to file a civil lawsuit against the employer or file a workers' compensation claim with the Industrial Commission of Arizona (ICA).

If the employee files a civil lawsuit, simply proving the injury is evidence of negligence on the employer's part. If the employee opts for a workers' compensation claim, the ICA's Special Fund Division/No Insurance Section handles it. The Special Fund will process the claim and pay medical and compensation benefits if the claim is accepted. Subsequently, the Special Fund will seek reimbursement from the uninsured employer for all benefits paid to the injured worker. In addition to the reimbursement, the uninsured employer will face a penalty of 10% of the benefits paid or $1,000, whichever is greater, plus interest on the total.

How does Industrial Commission of Arizona deal with uninsured employers?

The ICA can take further legal action against uninsured employers. They may:

• Assess a civil penalty of $1,000 for the first instance of failing to obtain workers' compensation insurance, regardless of whether an employee files a claim.

• Increase the penalty to $5,000 for a second instance and $10,000 for a third instance within a five-year period.

• Seek an injunction from the Superior Court ordering the employer to cease business operations until they obtain the required insurance.

Furthermore, operating a business without workers' compensation insurance is a Class 6 felony in Arizona. In summary, Arizona's workers' compensation system provides a safety net for employees injured while working for uninsured employers through the Special Fund. The system also imposes various penalties and legal actions to hold uninsured employers accountable.