State, Tribe Settle Workers’ Comp Dispute

State regulators and a Humboldt County Indian tribe settled a dispute Tuesday over the alleged sale of illegal workers’ compensation insurance.

Mainstay Business Solutions Inc., a business sponsored by the tribal government of the Blue Lake Rancheria, dropped a suit filed against the state Department of Industrial Relations and agreed to self-insure.

In late 2003, regulators took enforcement actions against several Northern California restaurants that contracted with Mainstay, a temporary staffing firm, to provide employees and payroll services. The state said Mainstay’s clients violated state law by failing to provide workers’ compensation coverage.

Mainstay countered that the Blue Lake Rancheria’s status as a sovereign Indian tribe gave it immunity from state enforcement activities.

Mainstay sued the state in Sacramento Superior Court, citing the sovereignty issue.

After more than a year of negotiations, the two sides brokered an agreement. Mainstay waived its sovereignty claim and applied to the state for certification as a self-insured employer.

“With this settlement, Mainstay employees can rest assured they are fully covered under workers’ compensation insurance, and employers can be certain they are doing business with an entity that is in compliance with California workers’ compensation laws,” said John Rea, acting director of the Department of Industrial Relations.