If an investigator finds that an employer is performing work that is outside the classification codes for which their policy covers, they can report it to the State. The Department of Financial Services has the power at that moment to issue a stop work order. In order to release the stop work order, the employer will have to pay at least $1000.00. At that point, the Department of Financial Services will require the employer to submit payroll records and they generally require records for the preceding two year period.
The Department of Financial Services calculates the premium that should have been paid based upon what they believe were the classifications that were not covered on the policy. The penalty can be two times the premium that should have been paid within the preceding two year period or $1000 whichever is greater. Once the Department assesses their penalty, you have only 21 days within which to appeal it.
So, the Department could investigate an employer by looking at their website. If the website lists services that are not being covered under the policy, then they can send an investigator to confirm the employer’s activities. Your website and Facebook page could also show pictures of events or activities performed by employees and may provide evidence of misrepresenting employee duties. Often times, employers hire marketing companies to manage their website and Facebook page. These companies may use stock photos or captions that could incorrectly indicate the employer is engaged in services or activities that they are not.
If your business is issued a stop order, it is best to contact an attorney immediately. An attorney is able to gather all the required payroll records and make sure only those that truly represent payroll are submitted to the Department. The time deadlines are strict and failure to meet them can cause the business to pay penalties in excess of what they actually owe. In addition, an attorney has the knowledge of the classifications codes and whether the codes being applied by the Department are accurate.