Will economy lead to more employer workers' comp fraud?

A story out of California has us wondering if the state of the economy and the financial difficulties  that many businesses are going through will lead to more workers compensation fraud by employers?

Workers' compensation fraud is most commonly perpetrated by employees -- not by injured workers, as is the common perception. Two common tactics -- misclassifying employees job duties, treating employees as independent contractors or failing to carry workers' compensation insurance, as required by law. Misclassification of job duties helps companies keep their workers' comp insurance premiums lower, but it also means that employees may not be protected if they are injured on the job. Workers' comp fraud has a huge societal cost, as well.

At least one state -- California -- has reported an uptick in employer fraud cases in the past year, presumably tied to the economic dowturn.

"The theory is that in a difficult economic climate, crime tends to go up as does fraud. People who aren't otherwise motivated to be dishonest may follow that path," said Maureen O'Connell deputy district attorney [in San Bernadino] with the workers' compensation fraud unit.

The fraud unit is cracking down on businesses that don't abide by the law, by making surprise inspections to determine whether companies have proper workers' comp insurance. Those that don't face a $10,000 fine and up to a year in jail.