The California Department of Insurance moved to stop a central valley company from selling workers’ compensation and liability policies because it claims they are not properly registered with the Department of Insurance, which means those insured through the company may not have valid insurance coverage.

In the cease and desist order, served Monday, October 17, 2016, the department alleges Agricultural Contracting Services Association, Incorporated, doing business as American Labor Alliance and its affiliate CompOne USA, are soliciting, marketing, selling, and issuing to employers statewide what the company claims are valid workers’ compensation policies, when in fact the department’s Investigation Division found the company is not properly registered with the regulator and is allegedly transacting insurance without proper authority.

According to the allegations of the Order, “Respondents are not currently licensed or authorized by the Insurance Commissioner to act in any capacity regarding the transaction of insurance in California, and during relevant periods herein, did not hold any license, Certificate of Authority, or permit , issued by the Insurance Commissioner, to act in any capacity regarding the transaction of insurance in California.”

Insurance Code § 12921.8(a) authorizes the Insurance Commissioner to issue a Cease and Desist Order to a person who has acted in a capacity for which a license, registration, permit, or Certificate of Authority from the Insurance Commissioner was required but not possessed.

“Employers who purchased insurance from American Labor Alliance are likely at great financial risk,” said Insurance Commissioner Dave Jones. “Employers must protect themselves, their employees, and their business by checking with the Department of Insurance to verify the company and agent or broker’s license is valid and that the policy they purchased is also valid.”

CDI claims that “American Labor Alliance attracted customers by marketing low workers’ compensation premium rates, but the end result is employers holding worthless pieces of paper, as the policies are not valid, which means the employers have no coverage – leaving them and their employees at great risk.”

The order is effective immediately. Employers transacting business with Agricultural Contracting Services Association, Inc., American Labor Alliance, or affiliate CompOne USA, should contact the Department of Insurance Investigations Division at 661-253-7500 for assistance in determining the validity of their workers’ compensation coverage.

American Labor Alliance has requested an administrative hearing before an administrative law judge. The hearing is not yet scheduled. If American Labor Alliance continues marketing and selling the alleged illegal products, in defiance of the department’s cease and desist order, they face fines up to $5,000 per day for each day they do not comply.