News Flash
Fake PEOs Are Scamming Businesses & Employees
A growing problem is threatening the integrity of workers’ compensation insurance: fraudulent Professional Employer Organizations. These companies operate under the guise of providing HR, payroll, and insurance coverage for client businesses, but many fail to secure legitimate workers’ compensation policies. The result? Workers are left without coverage, businesses face unexpected liabilities, and fraudsters walk away with millions.
The Department of Labor and the U.S. Department of Labor have been cracking down on fraudulent PEOs, highlighting the devastating impact on businesses and workers. The Bureau of Labor Statistics and Labor Statistics reports show that the rise in fraudulent insurance schemes has left countless employees in an uncertain injury position without proper coverage.
How Fake PEOs Operate
Fraudulent PEOs lure small and mid-sized businesses with promises of lower insurance rates, payroll management, and HR services. The catch? Many of these firms never actually purchase valid workers' comp policies or create shell agreements to mask their lack of coverage. They rely on fake certificates of insurance (COIs), manipulate payroll reporting to avoid paying full premiums, or simply disappear when claims arise.
Employers Outsourcing followed this exact playbook, claiming it was legitimately insured through Simplify HR, an entity that had no real workers’ compensation policy in place. This left injured workers in a difficult injury position, forcing them into a complex disability management nightmare.
Similar tactics were exposed in Santelices v. Baron HR, LLC, where Baron HR structured its employment relationships in a way that made it unclear who was responsible for workers’ compensation coverage. The Department of Labor and U.S. Department of Labor continue to investigate fraudulent PEOs, recognizing their impact on the disability management process.
Adding to the challenge, AI-generated misinformation is being used by fraudulent PEOs to falsify documents, making it even harder for businesses to verify legitimate coverage. According to Danielle Keats Citron and Keats Citron, the increasing use of digital forgery in fraudulent PEOs has heightened risks for companies that unknowingly enter into these schemes
The Ripple Effect on Businesses and Workers
When fake PEOs collapse or get caught, the damage extends far beyond their immediate clients.
Workers are left without medical care – Injured employees may not receive benefits because no valid insurance exists, forcing them into an unstable injury job where they are unable to work.
Client companies get stuck with claims – Even if a business thought its workers were covered, it can still be held responsible when the PEO’s fraud is exposed.
Taxpayers foot the bill – Without insurance, injured workers turn to state disability programs and public hospitals, shifting costs to taxpayers.
Legitimate businesses face rising premiums – When fraud leads to unpaid claims, insurance carriers increase rates for honest companies to make up the losses.
Nurse Intervention and Field Nurse teams have been crucial in assisting injured employees who have fallen victim to PEO fraud. Many cases involve employees trapped in a fraudulent injury job, where they receive little to no compensation. A recent news release from the Bureau of Labor Statistics emphasizes the growing need for regulatory enforcement to prevent further fraud.
The Department of Labor and U.S. Department of Labor are increasing enforcement efforts against fraudulent PEOs, but the problem continues to grow. More businesses are unknowingly partnering with fake PEOs, putting their financial stability at risk. The disability management process has become even more complicated as fraudulent companies manipulate records to hide their lack of coverage.
How to Spot a Fake PEO
Businesses can take steps to avoid falling victim to PEO fraud:
Verify Workers’ Comp Coverage – Request the policy number and insurer details and confirm coverage directly with the insurance carrier. Fake PEOs often provide fraudulent or expired COIs.
Check PEO Licensing – Many states require PEOs to be licensed. Search California’s Division of Labor Standards Enforcement database to ensure legitimacy.
Demand Transparency – Fraudulent PEOs avoid disclosing their insurance details. If a PEO refuses to provide policy documentation, it’s a red flag.
Consult an Attorney or Broker – A qualified insurance broker or attorney can review contracts to ensure workers’ comp policies are valid.
If you suspect your company’s workers' comp coverage may be fraudulent, report it immediately. Submit suspicious insurance certificates at CheckMyCert.org.
A news release from the U.S. Department of Labor emphasized the need for businesses to educate themselves on how fraudulent PEOs operate. Nurse Intervention and Field Nurse investigations are helping workers stuck in fraudulent injury jobs find appropriate legal and medical assistance. Danielle Keats Citron and Keats Citron continue to advocate for stronger legal measures against fraudulent employment schemes that manipulate the disability management process.
As fraudsters evolve their tactics, businesses must remain vigilant. By staying informed, verifying workers' compensation policies, and consulting trusted professionals, companies can protect their workers and financial stability from fraudulent PEOs.
News Flash
Fake PEOs Are Scamming Businesses & Employees
A growing problem is threatening the integrity of workers’ compensation insurance: fraudulent Professional Employer Organizations. These companies operate under the guise of providing HR, payroll, and insurance coverage for client businesses, but many fail to secure legitimate workers’ compensation policies. The result? Workers are left without coverage, businesses face unexpected liabilities, and fraudsters walk away with millions.
The Department of Labor and the U.S. Department of Labor have been cracking down on fraudulent PEOs, highlighting the devastating impact on businesses and workers. The Bureau of Labor Statistics and Labor Statistics reports show that the rise in fraudulent insurance schemes has left countless employees in an uncertain injury position without proper coverage.
How Fake PEOs Operate
Fraudulent PEOs lure small and mid-sized businesses with promises of lower insurance rates, payroll management, and HR services. The catch? Many of these firms never actually purchase valid workers' comp policies or create shell agreements to mask their lack of coverage. They rely on fake certificates of insurance (COIs), manipulate payroll reporting to avoid paying full premiums, or simply disappear when claims arise.
Employers Outsourcing followed this exact playbook, claiming it was legitimately insured through Simplify HR, an entity that had no real workers’ compensation policy in place. This left injured workers in a difficult injury position, forcing them into a complex disability management nightmare.
Similar tactics were exposed in Santelices v. Baron HR, LLC, where Baron HR structured its employment relationships in a way that made it unclear who was responsible for workers’ compensation coverage. The Department of Labor and U.S. Department of Labor continue to investigate fraudulent PEOs, recognizing their impact on the disability management process.
Adding to the challenge, AI-generated misinformation is being used by fraudulent PEOs to falsify documents, making it even harder for businesses to verify legitimate coverage. According to Danielle Keats Citron and Keats Citron, the increasing use of digital forgery in fraudulent PEOs has heightened risks for companies that unknowingly enter into these schemes
The Ripple Effect on Businesses and Workers
When fake PEOs collapse or get caught, the damage extends far beyond their immediate clients.
Workers are left without medical care – Injured employees may not receive benefits because no valid insurance exists, forcing them into an unstable injury job where they are unable to work.
Client companies get stuck with claims – Even if a business thought its workers were covered, it can still be held responsible when the PEO’s fraud is exposed.
Taxpayers foot the bill – Without insurance, injured workers turn to state disability programs and public hospitals, shifting costs to taxpayers.
Legitimate businesses face rising premiums – When fraud leads to unpaid claims, insurance carriers increase rates for honest companies to make up the losses.
Nurse Intervention and Field Nurse teams have been crucial in assisting injured employees who have fallen victim to PEO fraud. Many cases involve employees trapped in a fraudulent injury job, where they receive little to no compensation. A recent news release from the Bureau of Labor Statistics emphasizes the growing need for regulatory enforcement to prevent further fraud.
The Department of Labor and U.S. Department of Labor are increasing enforcement efforts against fraudulent PEOs, but the problem continues to grow. More businesses are unknowingly partnering with fake PEOs, putting their financial stability at risk. The disability management process has become even more complicated as fraudulent companies manipulate records to hide their lack of coverage.
How to Spot a Fake PEO
Businesses can take steps to avoid falling victim to PEO fraud:
Verify Workers’ Comp Coverage – Request the policy number and insurer details and confirm coverage directly with the insurance carrier. Fake PEOs often provide fraudulent or expired COIs.
Check PEO Licensing – Many states require PEOs to be licensed. Search California’s Division of Labor Standards Enforcement database to ensure legitimacy.
Demand Transparency – Fraudulent PEOs avoid disclosing their insurance details. If a PEO refuses to provide policy documentation, it’s a red flag.
Consult an Attorney or Broker – A qualified insurance broker or attorney can review contracts to ensure workers’ comp policies are valid.
If you suspect your company’s workers' comp coverage may be fraudulent, report it immediately. Submit suspicious insurance certificates at CheckMyCert.org.
A news release from the U.S. Department of Labor emphasized the need for businesses to educate themselves on how fraudulent PEOs operate. Nurse Intervention and Field Nurse investigations are helping workers stuck in fraudulent injury jobs find appropriate legal and medical assistance. Danielle Keats Citron and Keats Citron continue to advocate for stronger legal measures against fraudulent employment schemes that manipulate the disability management process.
As fraudsters evolve their tactics, businesses must remain vigilant. By staying informed, verifying workers' compensation policies, and consulting trusted professionals, companies can protect their workers and financial stability from fraudulent PEOs.
