California

Buying workers’ compensation for:

California

State Fund: Yes (Competitive)

Insurance Coverage Requirements: Workers’ Compensation is compulsory in California. Waivers are not permitted.

Who is Required to Purchase Workers’ Compensation Coverage?

The law requires employers to have workers’ compensation insurance if they have even one part-time employee. If you are a roofer and don’t have any employees, you are still required to carry workers’ compensation insurance. If you are a real estate broker you are required to carry workers’ compensation insurance for your agents, even if they are independent contractors. All employees of the company, including corporate officers and directors, must be included in the policy unless they are the sole owners of the firm. In the case of sole owners, they may elect not to be covered. Out-of-state employers need workers’ compensation coverage if an employee is regularly employed in California or a contract of employment is entered into there.

California Workers’ Compensation laws cover agricultural workers the same as all other employees:

Any domestic worker--including one who cares for and supervises children--employed 52 or more hours, or who earned $100 or more, during 90 calendar days immediately preceding date of injury or last employment exposing such worker to the hazards of an occupational disease is covered. Excludes workers employed by a parent, spouse or child.

Workers’ compensation insurance coverage can be obtained for all employees not covered under law, if the employer so chooses to purchase the insurance. If coverage is purchased, the statutory exclusion is waived and the affected employee is then fully covered as if no exclusion ever existed.

Factors that Impact Coverage

  • You are a sole proprietor: In California, sole owners are excluded from coverage, but you have the option to include yourself.
  • You are a partner, corporate officer or member of an LLC: You are considered employees and must be covered by a workers’ compensation policy.

Failure to Secure Compensation

Failing to have workers’ compensation coverage is a criminal offense. It is a misdemeanor punishable by either a fine of up to $10,000 or imprisonment in the county jail for up to one year, or both. Additionally, the state issues penalties of up to $100,000 against illegally uninsured employers.

If the Division of Labor Standards Enforcement (state labor commissioner) determines that an employer is operating without workers’ compensation coverage, a stop order will be issued. This order prohibits the use of employee labor until coverage is obtained, and failure to observe it is a misdemeanor punishable by imprisonment in the county jail for up to 60 days, or by a fine of up to $10,000, or both. The Division of Labor Standards Enforcement will also assess a penalty of $1,000 per employee on the payroll at the time the stop order is issued and served, up to $100,000.

Additionally, if an injured worker files a workers’ compensation claim that goes before the Workers’ Compensation Appeals Board and a judge finds the employer had not secured insurance as required by law, when the dispute is resolved the uninsured employer may be assessed a penalty of $10,000 per employee on the payroll at the time of injury if the worker’s case was found to be compensable, or $2,000 per employee on the payroll at the time of injury if the worker’s case was non-compensable, up to a maximum of $100,000.

If an employee gets hurt or sick because of work and you are not insured, you are responsible for paying all bills related to the injury or illness. If you are illegally uninsured and an employee gets sick or hurt because of work, that employee can file a civil action against you in addition to filing a workers’ compensation claim.

The Uninsured Employers Benefit Trust Fund is a special unit within the Division of Workers’ Compensation that may pay benefits to injured workers who get hurt or ill while working for an illegally uninsured employer. The UEF pursues reimbursement of expenditures from the responsible employer through all available avenues, including filing liens against their property.

Proof of Coverage is Required

You must post the "notice to employees" poster in a conspicuous place at the work site. This poster provides employees with information on your workers’ compensation coverage and where to get medical care for work injuries. The notice must be easily understandable and posted in both English and Spanish (where there are Spanish-speaking employees). The notice must include the following details:

  • How to get emergency medical treatment
  • The types of events, injuries, and illnesses covered by workers’ compensation
  • An injured employee’s right to receive medical care and right to select and change the treating physician after the first 30 days
  • An injured employee’s right to receive temporary and permanent disability benefits, supplemental job displacement benefits, vocational rehab benefits, and death benefits, as appropriate
  • Where to report injuries
  • The existence of time limits to notify the employer of an injury
  • Protections against workers’ compensation discrimination
  • The location and phone number of the nearest information and assistance officer.

The form and content of the notice are to be made available to self-insured employers and insurers by the administrative director. Insurers are to provide this notice to each of their policyholders, with advice concerning the requirements of this section and the penalties for a failure to post this notice.

Failure to post this notice is a misdemeanor that can result in a civil penalty of up to $7,000 per violation. Additionally, a failure to post means the employee can choose to be treated by his or her personal physician if an injury occurs.

Every employer subject to the compensation provisions of the code, except employers of employees defined in subdivision (d) of Section 3351, must give every new employee, either when the employee is hired or by the end of the first pay period, written notice of the information contained in Cal Lab Code 3550

Every employer is required to give any employee who is a victim of a crime that occurred at the employee’s place of employment written notice that the employee is eligible for workers’ compensation for injuries, including psychiatric injuries, that may have resulted from the crime. The employer must provide this notice, either personally or by first-class mail, within one working day of the crime, or within one working day of the date the employer reasonably should have known of the crime.

Independent Contractors

Mistakenly classifying an employee as an independent contractor can result in significant fines and penalties.

View 20 factors used by the IRS and our independent contractor questionnaire to determine whether you have enough control over a worker to be an employer.

Other Tips

If your insured employs workers in multiple states or your insured’s employees are temporarily working out-of-state, they need to purchase insurance for all the states where their workers are located, according to each state’s laws. Call 1-800-476-2948 and let us walk you through it.

The nature of your insured’s business, number of employees being covered and past coverage and claims are all factors in how much their premium will cost.