Illegal “Wellcare” Payroll Scheme – Violation of CA Labor Code §§ 3700.5, 226, 2802 & Business and Professions Code § 17200 

Dear [Contact Name]: 

The Workers’ Rights Compliance Alliance (“WRCA”), a California nonprofit watchdog organization, has obtained evidence indicating that Offending Corporation is engaged in an unlawful payroll scheme involving a so-called “WellCare” or “Wellness Reimbursement” plan. Our investigation shows that employees are charged $1,000 monthly for a purported wellness benefit and receive $800 back as disguised wage payments. This arrangement: 

• Falsely reduces employees’ taxable wages; 

• Avoids employer FICA and Medicare tax obligations; 

• Evades workers’ compensation insurance premiums; 

• Violates multiple California Labor Code provisions and constitutes unfair business practices. 

Such a scheme is a textbook violation of: 

• Labor Code § 3700.5 (failure to secure workers’ compensation); 

• Labor Code § 226 (inaccurate wage statements); 

• Labor Code § 2802 (unlawful cost-shifting); 

• Business & Professions Code § 17200 (unfair and unlawful practices). 

To avoid immediate litigation, WRCA invites Offending Corporation to enter into a pre-litigation resolution by agreeing to the following terms: 

1. Immediate termination of the “Wellcare” scheme; 

1. Full restitution to affected employees for diverted wages and lost benefits; 

1. Payment of $\ to WRCA to cover enforcement, monitoring, and investigation costs; 

1. One-year compliance monitoring agreement; 

1. Execution of a written settlement agreement including stipulated penalties for future noncompliance. 

Our formal complaint is complete and ready for filing in Superior Court. However, in the interest of efficiency and cooperative compliance, we will withhold filing for ten (10) business days to allow for a resolution. 

We urge you to consult legal counsel and contact us directly should you wish to resolve this matter. WRCA is committed to fair labor compliance and will aggressively pursue remedies where workers and the public are harmed. 

Sincerely, 

[Your Name] 
Attorney for Workers’ Rights Compliance Alliance 
[Phone Number] 
[Email Address]