Association launches to fight black-market workers' comp
Cal-SARA aims to clean up fraudulent California staffing agencies that operate without legitimate workers' comp insurance and those that enable them.
The California Staffing Agency Reform Association (Cal-SARA) has been created with the aim of fighting fraudulent and black-market workers’ compensation insurance schemes amongst staffing agencies.
Growing demand for contingent or variable staffers, coupled with decreases in the supply of employees and workers’ compensation insurers, is allowing a “massive black market to grow virtually unchecked,” explained Mark Bertler, executive director of Cal-SARA, in a release.
“These illegal practices put staffing agencies, injured workers and California taxpayers at risk,” he said. “Regulators have thus far been unsuccessful in policing these activities causing the situation to get worse.”
The trade group will provide education, training and legal support for its members. The nonprofit will work to protect businesses by proactively pursuing parties enabling illegal arrangements, including brokers and PEOs.
“Self-reform is the fastest and most reliable way to clean up our industry,” Bertler said. “Unethical and unscrupulous actors continue to destroy the market by blatantly utilizing illegal business practices without fear of sanction or punishment. The temptation to cross the line and operate in this emerging and dangerous underground marketplace is often too great. Once they stop paying for workers’ compensation insurance, they may also resort to payroll tax fraud as well.”
Bertler added that if fraudulent activities continue to grow, the entire industry in California could see broad government intervention.
Related: