California employers who purchased insurance with American Labor Alliance and CompOne USA may not have valid policies. The California Labor Commissioner’s Office this week advised employers who purchased insurance from the two firms that these companies are not licensed to sell insurance in California.

The California Department of Insurance in December imposed a $4.3 million penalty on the companies for selling workers’ compensation and liability policies to employers of farmworkers without being properly licensed.

Employers must maintain valid workers’ compensation insurance coverage for all workers, including part time employees. If the Labor Commissioner’s Office finds an employer does not have valid coverage for its workers, it can cite the employer $1,500 per employee not covered by valid workers’ compensation insurance, and issue a stop order prohibiting work until valid insurance is acquired. The employer may also be required to pay employees’ lost wages during the work stoppage. Violation of the stop order could result in additional penalties up to $10,000 and misdemeanor charges.