Code Details

Labor Code – LAB
DIVISION 4. WORKERS’ COMPENSATION AND INSURANCE [3200 – 6002] ( Heading of Division 4 amended by Stats. 1979, Ch. 373. )
PART 1. SCOPE AND OPERATION [3200 – 4418] ( Part 1 enacted by Stats. 1937, Ch. 90. )
CHAPTER 4. Compensation Insurance and Security [3700 – 3823] ( Chapter 4 enacted by Stats. 1937, Ch. 90. )
ARTICLE 1. Insurance and Security [3700 – 3709.5] ( Article 1 enacted by Stats. 1937, Ch. 90. )

Exact Statute Text

If any employer fails to secure the payment of compensation, any injured employee or his dependents may bring an action at law against such employer for damages, as if this division did not apply.

(Amended by Stats. 1971, Ch. 1598.)

Labor Code § 3706 Summary

California Labor Code § 3706 provides a critical avenue for recourse for employees who are injured while working for an employer that has failed to carry the legally required workers’ compensation insurance. Typically, workers’ compensation is the exclusive remedy for an injured employee, meaning they cannot sue their employer in civil court. However, this statute creates an important exception: if an employer does not “secure the payment of compensation” (i.e., fails to have workers’ comp insurance), the injured employee or their dependents are explicitly permitted to file a personal injury lawsuit against that employer for damages. This means the employee can pursue compensation through the civil justice system, just as if the entire workers’ compensation system did not exist.

Purpose of Labor Code § 3706

Labor Code § 3706 serves as a powerful enforcement mechanism within California’s workers’ compensation system. Its primary purpose is to deter employers from operating without the mandatory workers’ compensation insurance. California law requires nearly all employers to provide workers’ compensation coverage for their employees. This insurance is designed to provide medical care and lost wage benefits to injured workers, regardless of fault. When an employer fails to secure this coverage, they not only violate the law but also leave their employees vulnerable, without the safety net the system is designed to provide.

By allowing an injured employee to bypass the exclusive remedy provision of workers’ compensation and sue the employer directly in civil court, Labor Code § 3706 holds non-compliant employers accountable. It ensures that injured workers still have a path to recover damages – potentially including pain and suffering, which is not typically available in workers’ comp claims – and creates a significant financial incentive for employers to comply with insurance requirements, thereby protecting the workforce.

Real-World Example of Labor Code § 3706

Imagine Maria works for “Speedy Delivery,” a small logistics company. One day, while making a delivery, Maria slips on a wet floor in a client’s warehouse, suffering a broken leg and a concussion. She reports the injury to her supervisor, but when she attempts to file a workers’ compensation claim, she discovers that Speedy Delivery has never purchased workers’ comp insurance, despite being legally required to do so.

Under normal circumstances, Maria would file a workers’ comp claim, and her medical bills and a portion of her lost wages would be covered, but she wouldn’t be able to sue Speedy Delivery for additional damages like pain and suffering. However, because Speedy Delivery failed to secure workers’ compensation insurance, Labor Code § 3706 applies.

Instead of navigating a non-existent workers’ comp system, Maria can now hire a personal injury attorney and file a civil lawsuit directly against Speedy Delivery for damages. In this lawsuit, she can seek compensation for all her medical expenses, lost wages, future earning capacity, and importantly, for her pain and suffering and emotional distress resulting from her injuries. The court will treat her case as if the workers’ compensation laws never applied, offering her a broader range of potential recovery than if insurance had been in place.

Related Statutes

• Labor Code § 3700: This statute mandates that every employer must “secure the payment of compensation” for employees. It forms the foundational requirement that, if violated, triggers Labor Code § 3706.
• Labor Code § 3700.5: This section outlines the penalties an employer faces for failing to secure workers’ compensation insurance, including misdemeanor charges, fines, and imprisonment. It reinforces the legal obligation that Labor Code § 3706 helps enforce.
• Labor Code § 3708: This related statute establishes several important presumptions and limitations for civil actions brought under Labor Code § 3706. Specifically, it states that in such a civil action:

* The employer is presumed to have been negligent.
* The employer cannot assert the defenses of contributory negligence, assumption of risk, or that the injury was caused by the negligence of a fellow employee.
* These provisions significantly favor the injured employee in their civil lawsuit.

• Labor Code § 3602: This statute details the “exclusive remedy rule” of workers’ compensation, stating that workers’ comp benefits are generally the sole remedy for an injured employee against their employer. Labor Code § 3706 acts as a critical exception to this general rule.

Case Law Interpreting Labor Code § 3706

• Doney v. Workers’ Comp. Appeals Bd. (1970) 9 Cal.App.3d 921, 927: This case discusses the dual nature of an employee’s remedy when an employer is uninsured, noting that an injured employee may pursue both an application for workers’ compensation benefits from the Uninsured Employers Benefits Trust Fund (UEBTF) and a civil action against the uninsured employer under Labor Code § 3706. [Link to Doney v. Workers’ Comp. Appeals Bd. on Google Scholar](https://scholar.google.com/scholar_case?case=8658428581698748117)
• Zepeda v. Payless ShoeSource (2019) 36 Cal.App.5th 687, 691-692: This more recent case reiterates that if an employer fails to carry workers’ compensation insurance, the injured employee’s remedies are not limited by the Workers’ Compensation Act, and they can bring a civil action for damages as if the Act did not apply, referencing Labor Code § 3706. [Link to Zepeda v. Payless ShoeSource on Google Scholar](https://scholar.google.com/scholar_case?case=17621184643350293144)
• Mendoza v. Brodeur (2020) 52 Cal.App.5th 1025, 1030: This case further clarifies the scope of the civil action available under Labor Code § 3706, emphasizing that the employer’s failure to secure workers’ compensation opens them up to a lawsuit where the usual workers’ compensation exclusivity rule is abrogated. [Link to Mendoza v. Brodeur on Google Scholar](https://scholar.google.com/scholar_case?case=16972074363297042594)

Why Labor Code § 3706 Matters in Personal Injury Litigation

Labor Code § 3706 is a cornerstone of protection for injured workers in California, significantly impacting personal injury litigation when an employer is uninsured. For injured employees, this statute is crucial because it transforms what would typically be a workers’ compensation claim into a direct civil lawsuit. This change offers several key advantages:

1. Access to Full Damages: Unlike workers’ compensation, which primarily covers medical expenses and lost wages, a civil action allows the employee to seek “full damages,” including compensation for pain and suffering, emotional distress, loss of enjoyment of life, and other non-economic damages. This can significantly increase the potential recovery for severely injured workers.
2. No-Fault vs. Negligence: While workers’ compensation is a “no-fault” system, a civil action under Labor Code § 3706 allows the employee to prove employer negligence. However, related statute Labor Code § 3708 further tips the scales in the employee’s favor by creating a *presumption of negligence* against the uninsured employer and barring certain common employer defenses (contributory negligence, assumption of risk, fellow-servant rule). This significantly simplifies the employee’s burden of proof regarding liability.
3. Strategic Leverage: For personal injury attorneys representing injured employees, Labor Code § 3706 provides powerful leverage. The threat of a civil lawsuit, with its potentially higher damage awards and favorable evidentiary rules, often incentivizes uninsured employers to settle claims more equitably.
4. Enforcement of Employer Obligations: For the legal system, this statute underscores the seriousness of an employer’s obligation to carry workers’ compensation insurance. It ensures that employers who shirk this responsibility face severe financial consequences, thereby reinforcing the integrity of the workers’ compensation system and protecting the state’s workforce.

In essence, Labor Code § 3706 converts a worker’s injury from a workers’ compensation issue to a full-fledged personal injury case against the employer, offering broader remedies and a more favorable legal landscape for the plaintiff.