If your business works with staffing agencies, here’s a reality check: not every agency plays by the rules. One of the biggest threats to your company is Workers' Compensation Fraud—and you might not even know it’s happening until it’s too late.

California law requires every employer to provide Workers’ Compensation insurance for injured workers, including those hired through agencies. But some agencies commit fraudulent workers’ compensation claims or even falsify their insurance policy to save money and boost profits. When that happens, your company could be the one paying the price.

What Is Workers’ Comp Fraud?

Workers’ Compensation Fraud happens when someone—an employer, agency, or even a worker—lies or hides the truth to get Workers’ Compensation Benefits or avoid paying premiums. One common scam is when agencies use someone else’s insurance (known as “piggybacking”). Another is when they misclassify employees as independent contractors to avoid higher premium costs.

This kind of fraud puts your business at risk for legal trouble, massive fines, and even criminal charges. According to California law, clients of fraudulent staffing agencies may become responsible for the entire Workers’ Compensation Claim if an injured worker files one—and the agency’s insurance turns out to be fake.

Watch for These Warning Signs of Fraud

Detecting fraud starts with knowing what to look for. Here are some warning signs of fraud related to workers’ comp claims:

• The agency avoids giving you a real Certificate of Insurance

• The company name on the policy doesn’t match the one you hired

• Their insurance company seems sketchy or hard to verify

• Their insurance covers a different industry than the one you’re hiring for

• They’re hesitant to provide past incident reports or medical evaluation records

Scammers also use claim mills or shady medical care providers to inflate medical costs and create fake injuries. This is why you must verify any Workers' Compensation insurance you receive.

Use CheckMyCert.org to Protect Your Business

Instead of guessing whether a COI is legit, use the CheckMyCert.org reporting tool. It’s a free, private service where you can upload and verify any workers’ comp certificate. No one will call you, and your data stays confidential.

By using this tool, you’ll help stop scams before they grow and stay compliant with California’s Workers’ Compensation Law. It’s one of the easiest ways to protect your team and your company from premium fraud.

How to Audit for Employee Misclassification

Another huge issue? Employee misclassification. This happens when agencies label full-time workers as independent contractors, which often reduces or cancels their access to disability benefits, medical treatment, and other Workers’ Compensation Benefits.

To avoid falling for this, here’s how to audit for employee misclassification:

• Review job roles and compare them to how they’re classified on paperwork

• Check for missing or vague medical reports

• Look for mismatched job titles or rotating worker names

• Make sure you're getting proper documentation, including claim forms like DWC-1 and employer’s reports (5020)

Know Your Rights as a Whistleblower

If you find out your staffing partner is lying about Workers' Compensation insurance, you have the right to report it. Thanks to whistleblower protection in California, business owners and employees are legally protected when exposing insurance fraud.

If you want to remain anonymous, the CheckMyCert.org reporting tool has your back. It’s fast, simple, and reviewed by experts in compliance, staffing, and insurance fraud prevention.

Don’t Wait Until It's Too Late

Once a Workers' Compensation Claim is filed by an injured worker—and your agency has no real insurance—it’s your name on the lawsuit. It’s your company paying the fines. It’s your stress, your loss.

By learning how to identify comp fraud, spotting the warning signs of fraud, and using CheckMyCert.org’s free verification service, you stop the problem before it starts.