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Video Broadcast The DIR Breaks Up Another Under-Covered Pancake House Runtime 2:24 Real Media 56k | Broadband Windows Media Player 56k | Broadband Quicktime 56k | Broadband

With the Labor Commissioner coming in the front door and the Insurance Commissioner breaking down the back door, the state regulator tag team squeezed more than orange juice at nine International House of Pancakes (IHOP) restaurants Nov 7.

Mohammad Munir, the owner of seven IHOPs in the Sacramento area and two in Fresno is the latest to take a hit for contracting with a Professional Employer Organization (PEO) that supplied him with an occupational injury indemnity and medical benefit package.

The Department of Industrial Relations (DIR) has been vigilant recently in putting the clamps on businesses that contract with PEOs not authorized to provide work comp, like Mainstay Business Solutions, which is owned and operated by the Blue Lake Rancheria tribe.

The current tight market has created an ideal opportunity for such companies to test the boundaries of where their sovereignty ends and where the state laws kick in.

Munir was assessed a $100,000 penalty for his violation and a stop order was placed on his restaurants until he could secure the appropriate coverage.

California Labor Commissioner Art Lujan said, "Employers are responsible for obtaining valid workers' comp insurance or a certificate to self-insure, so before they turn vital programs like workers' comp and payroll over to a third party, such as a Professional Employer Organization (PEO), they must be certain the PEO is offering coverage certified by the Department of Insurance or DIR's self insurance program."

As part of the one two punch, Insurance Commissioner John Garamendi filed charges against the broker that sold the illegal policy to IHOP and against eight other agents and brokers.

With Denny’s and IHOP under their belts, it will be interesting to see where the DIR decides to go to lunch.