Representatives from staffing companies created a nonprofit trade association that aims to tackle illegal workers’ compensation practices in California’s staffing industry.
The California Staffing Agency Reform Association said in a statement that the current marketplace in California is “inundated with fraudulent and black market workers’ compensation insurance.”
The association, Cal-SARA, said legitimate staffing firms are forced to compete with companies that don’t carry legitimate work comp coverage as part of a scheme to illegally reduce the cost of doing business.
“Customers of the California staffing industry have come to accept these illegitimate operations, largely due to the unfilled and accelerating demand for workers,” Cal-SARA said in a statement. “Regulators appear to be playing ‘whack-a-mole’ and cannot seem to shut them down as fast as they pop up.”
The association said it will provide education, training and legal support for its members while also assisting regulators and insurers.
“Cal-SARA will also act to protect its members from illegal and unethical activity by aggressively pursuing all parties who enable these illegal arrangements, including brokers and (professional employer organizations),” the association’s statement reads.
Mark Bertler, executive director of the California Staffing Agency Reform Association, said in a statement that self-reform is the fastest way to clean up the industry. Allowing fraudulent companies to continue operating creates the possibility that “broad government intervention could punish the entire industry,” he said.
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