There are severe penalties for the failure of an employer to provide workers' compensation coverage. First of all, if a worker is injured, he or she may sue the employer for civil damages. If the employer was at fault for the injury, this might result in the payment of a great deal of money by the employer.

Secondly, the Workers' Compensation Agency actively enforces the Workers' Disability Compensation Act. It has the authority to go into court and seek an order prohibiting the company from employing any persons in their business until such time as proper workers' compensation insurance coverage is obtained.

Finally, the employer may be subject to a fine of $1,000 or imprisonment for not less than 30 days nor more than 6 months, or both. Each day for which the employer is uninsured is considered a separate offense.