California Insurance Commissioner Dave Jones on Wednesday imposed a $4.3 million penalty on American Labor Alliance and CompOne USA for selling workers’ compensation and liability policies to employers of farmworkers without being properly licensed with the California Department of Insurance.

The penalty follows a cease and desist order issued by CDI 2016 against the Agricultural Contracting Services Association Inc. and its affiliates, the American Labor Alliance and CompOne USA, and Board Chair Marcus Asay, and an order issued by Jones in 2017 them to refrain from selling insurance policies in California.

Despite the orders the company continued to transact insurance without a license.

The company has argued it isn’t required to register with the department because it is selling benefits and not insurance.

An executive for the company in the past has argued that the company is an IRS exempt 501(c)(5) labor organization and has always filed as an entity claiming exception with the Department of Labor under the Multiple Employer Welfare Arrangement section of the federal Employee Retirement Income Security Act.

Jones on Wednesday encouraged employers doing business with Agricultural Contracting Services Association Inc., American Labor Alliance, or affiliate CompOne USA, to contact the CDI at (661) 253-7500 for assistance in determining the validity of their workers’ comp coverage.

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