Cost of Doing Business

• Paying for worker's compensation insurance is part of an employer's cost of doing business. Each eligible employer must obtain a worker's compensation insurance policy to protect employees in the event of work-related injury or illness. The employer alone is responsible for paying monthly premiums and may not pass the cost of worker's compensation on to his employees by deducting from wages. An employer committing this act is essentially stealing from his employees.
  
  

Right to Wages

• The Fair Labor Standards Act grants every employee the right to wages owed for a particular pay period after an employer makes all essential deductions, including federal and state taxes. It is a violation of this act for employers to attempt to withhold wages from workers to pay for business-related expenses, including worker's compensation insurance. Employees having wages deducted in this manner should file a wage claim with the state department of labor and also contact the attorney general's office.
  
  

Criminal Penalties

• Deducting employee wages to pay for worker's compensation costs or attempting to wrongfully withhold worker's compensation payments is a serious criminal offense. The punishment for this offense varies by state. For example, committing this crime in Mississippi is a felony punishable by a fine of the greater of either $5,000 or double the value of the fraud and a term of imprisonment not longer than three years. These penalties are in addition to any civil liability employers may incur as the result of criminal actions.
  
  

Civil Penalties

• The state where an employer is operating his business may assess a penalty for every day the employer does not repay his employees to wrongful wage deductions. In California, this penalty is equal to the total an employee's daily earnings for 30 days. Each affected employee may also sue the employer in civil court in an attempt to recover damages. The court may force an employer to sell business or personal property in an attempt to come up with enough money to properly repay workers for wrongful deductions as well as pay for punitive damages and legal fees.