# Underreported payroll: what six construction workers' comp fraud cases show GCs

Analyst brief R-18, COI Journal Resource Center. In case after case, the pattern is the same: a contractor buys a policy for a tiny payroll and runs a much bigger crew. The certificate looks fine. Here are six cases and what they suggest a GC should check.

Question: How does workers' comp premium fraud by contractors work, and how can a GC spot the risk?

By The editors, COI Journal. November 13, 2026. Docket COIJ-26-0019. Published by Forsured.

## Key findings

- In each of six cases, the contractor allegedly told its insurer about a far smaller payroll than it actually ran, or none at all.
- In a Minnesota case, a roofing subcontractor allegedly bought a policy with a $501 initial premium while certified payroll on a public job showed about $416,490 in wages over four months.
- One case is resolved: a Long Island iron contractor's owner pleaded guilty and paid $625,000 in restitution after underreporting more than $3.5 million in payroll.
- A GC can't audit a trade's payroll. It can compare the trade's crew size and work with what a policy that size could plausibly cover, and ask questions when they don't match.

## The pattern

Workers' comp premiums are based on payroll and the kind of work. Report less payroll, or safer job classes, and the premium drops. In each case below, prosecutors allege a construction contractor did exactly that.

The result, if the allegations are true, is a real policy that was never priced for the crew actually working. The certificate a GC receives can be genuine.

## The cases

**St. Paul, Minnesota, 2026.** The Ramsey County Attorney's Office charged the owner of a roofing and sheet metal subcontractor on a public housing roof project with two counts of workers' comp insurance fraud, [Minnesota Lawyer reported](https://minnlawyer.com/2026/05/14/roofing-subcontractor-charged-with-workers-comp-fraud-in-st-paul/). Prosecutors allege the owner told the insurer the company would have no employees needing coverage. The policy's initial premium was $501. Certified payroll reports filed on the project allegedly showed about $416,490 in wages from June to September 2025. Investigators estimated about $172,100 in premium avoided. No plea or outcome was reported.

**Long Island, New York, resolved.** The owner of an iron and erection contractor pleaded guilty to insurance fraud, and the company to a violation of state workers' comp law, after underreporting payroll by more than $3.5 million over three policy periods, [Insurance Journal reported](https://www.insurancejournal.com/news/east/2025/12/04/849862.htm). Annual audits by the New York State Insurance Fund found it. The owner paid $625,000 in restitution.

**Suffolk County, New York, 2026.** An asbestos removal contractor's application allegedly described one building service employee and $50,000 in payroll, for a $4,203 annual premium, [Insurance Journal reported](https://www.insurancejournal.com/news/east/2026/09/14/884886.htm). A state Inspector General investigation allegedly found abatement work and $354,112 in payroll, with premium underpaid by $163,561. The owner was arraigned in September 2026.

**Manhattan, 2023.** A drywall and carpentry contractor's principal was indicted on charges including insurance fraud, [Business Insurance reported](https://www.businessinsurance.com/indictment-alleges-ny-contractor-defrauded-state-insurance-fund-of-3m/). Prosecutors allege shell company checks created off-the-books payroll and that the state fund was underpaid by nearly $3 million. Status as of the 2023 report.

**San Francisco, 2022.** Prosecutors charged people tied to a plastering firm, alleging $5.8 million in unreported payroll and a hidden 2019 worker injury, [CBS News San Francisco reported](https://www.cbsnews.com/sanfrancisco/news/sf-construction-firm-cullinane-plastering-accused-insurance-tax-fraud-scif-edd/). The state fund estimated $270,000 in unpaid premiums. Status as of the 2022 report.

**South Florida, 2026.** Seven people were charged in what prosecutors call a roughly $100 million payroll scheme, [Insurance Journal reported](https://www.insurancejournal.com/news/southeast/2026/08/14/881604.htm). Shell companies allegedly bought minimal coverage by underreporting payroll and rented their certificates to subcontractors for a fee. Five defendants pleaded not guilty.

## What a GC can and can't check

A GC can't audit a trade's payroll. But the cases point to some practical checks:

- **Does the crew match the company?** If a trade shows up with a large crew, the named insured on its workers' comp should be the company employing them, not a different entity.
- **Does the work match the classification?** Roofing, abatement and iron work are high-risk classes. A trade doing that work whose paperwork suggests otherwise deserves a question.
- **Is the policy on file?** Run the state's public lookup where one exists. See [Checking workers' comp yourself](https://coijournal.com/reports/workers-comp-coverage-lookups/).
- **Do certified payroll and coverage line up?** On public jobs with certified payroll, the gap between reported wages and a trade's apparent coverage is visible to someone. In the Minnesota case, that gap is what investigators allegedly used.

None of these checks proves fraud. They're reasons to ask before work starts.

## How we wrote this

Based on published reporting by Minnesota Lawyer, Insurance Journal, Business Insurance and CBS News San Francisco. Five of the six cases were unresolved as of those reports; charges are allegations, and everyone charged is presumed innocent unless proven guilty. We report each case's status as of its source date. General information, not legal advice.

## Sources

- [Roofing subcontractor charged with workers' comp fraud in St. Paul](https://minnlawyer.com/2026/05/14/roofing-subcontractor-charged-with-workers-comp-fraud-in-st-paul/), Minnesota Lawyer, Laura Brown, May 14, 2026
- [Construction Firm Owner Pleads Guilty to $600K Workers' Compensation Fraud](https://www.insurancejournal.com/news/east/2025/12/04/849862.htm), Insurance Journal, December 4, 2025
- [Report on workers' comp premium charges against a Suffolk County asbestos removal contractor](https://www.insurancejournal.com/news/east/2026/09/14/884886.htm), Insurance Journal, September 14, 2026
- [Indictment alleges N.Y. contractor defrauded state insurance fund of $3M](https://www.businessinsurance.com/indictment-alleges-ny-contractor-defrauded-state-insurance-fund-of-3m/), Business Insurance, Jon Campisi, January 24, 2023
- [Report on insurance and tax fraud charges against a San Francisco plastering firm](https://www.cbsnews.com/sanfrancisco/news/sf-construction-firm-cullinane-plastering-accused-insurance-tax-fraud-scif-edd/), CBS News San Francisco, September 15, 2022
- [Seven People Charged in $100M Workers' Compensation Fraud Operation in Florida](https://www.insurancejournal.com/news/southeast/2026/08/14/881604.htm), Insurance Journal, William Rabb, August 14, 2026