California boasts one of the largest economies in the United States. It’s supported by 4.24 million small businesses, which accounts for 99.8% of all businesses in the state. Those small businesses also employ 7.4 million Californians. To protect those workers, California has enacted strong workers’ compensation laws that also provide help and support for business owners.
If you operate a business in California, the law requires you to carry workers’ compensation. That’s true even if you only have a single employee (and if that employee is you).
What’s more, you’re required by law to carry workers’ compensation if you employ any California residents, even if your business is in another state.
However, as with most states, California does have a handful of exemptions. These include the following:
These three are the only exemptions. All full-time employees and even part-time employees must be covered by workers’ compensation insurance.
Of course, the definition of an employee differs from state to state, so who counts as an “employee” in California? Anyone working for a company is considered an employee, whether through an expressed or implied arrangement, an oral or written agreement, or for lawful or unlawful purposes.
However, this concept does not extend to contractors. If you employ contractors (independent contractors who receive a 1099 at the end of the year rather than a W-2), you are not required to provide them with workers’ compensation coverage.
However, there is a significant risk that a state or federal court will rule that a contractor is truly an employee if you treat them as such, so we highly recommend carrying workers’ compensation for everyone who works for your business.
The short answer is “no”. Self-employed individuals, independent contractors, and sole proprietors are not required to carry workers’ compensation insurance under California law.
However, it’s always a wise choice to do so. If you are injured on the job, workers’ compensation insurance can help to cover your medical costs and lost wages even if your health insurance provider denies your claim or part of it.
Note that self-employed roofers are not exempt. If you are a roofer in California, you must carry workers’ compensation insurance, even if you are a sole proprietor or independent contractor.
California has some of the strictest workers’ compensation laws in the nation. Very few people are exempt. The handful who are include:
Interested in complying with workers’ compensation laws but want to limit the expense? There’s good news. While workers’ compensation is a requirement for all California businesses with at least one employee, you’ll discover a range of ways you can reduce your costs. Some of the most important steps include the following:
California workers’ compensation insurance works similarly to all other states. The process usually goes like this:
1. You purchase insurance based on your estimated annual payroll.
2. You pay your premium and obtain coverage.
3. Your business and employees are protected for a year.
4. You complete a year-end audit to ensure the payroll estimate was accurate.
5. You’ll receive a reimbursement check if the estimate was high. If it was low, you’ll get a bill.
Like other states, California requires that workers’ compensation insurance policies provide specific coverage areas. Note that you may elect to provide more coverage, but the basics include:
Medical care cost reimbursement
Supplemental job displacement benefits
Death benefits to survivors
Obtaining workers’ compensation insurance in California is relatively simple. In fact, business owners have three routes open to them.
1. You can buy it from an independent insurance agency , like Kickstand Insurance. With our easy online application process, you can get a quote in seconds.
2. You can buy it from California’s state fund.
3. You may be eligible to self-fund if you have a large business and have been in operation for a minimum of three years. You’ll need to verify that your business qualifies with the Office of Self-Insurance Plans.
All businesses with at least one employee are required by California law to carry workers’ compensation insurance. Failing to do so is a crime. The outcomes include the following:
California stipulates specific death benefits for survivors in the case of an employee’s death. These include:
Workers’ comp cases can be settled in two ways in California. The first type is called “stipulated findings and award.” In this case, the worker and the insurer agree on all counts and then the employee receives biweekly payments unless the employee requires money upfront. There is the opportunity to reopen the case within five years if the employee requires additional compensation due to the injury/medical condition.
The second type is called a “compromise and release.” In this situation, the employee receives a lump sum payment, and the case is closed. No further costs are covered even if they relate directly to the injury/accident.
Note that all settlements must be approved by a California judge, usually via an informal hearing.
California gives employees one year from the date of the injury/accident to file a workers’ compensation claim. However, if the employee is under 18 at the time of the accident, the one-year clock begins when they turn 18.
Another caveat is if there is a repetitive stress injury. In this case, the employee has one year from the time they noticed the condition.
If the original injury caused additional or further injury, the employee has up to five years from the date of the original injury to file a claim.
Start by filling out a short online form about your business. We’ll use that info to get you an estimated quote. Then, one of our experienced agents will contact you to review the quote and make sure you are getting the absolutely lowest rate possible for your business. Once the quote is finalized, you’re ready to buy the policy - often with coverage starting that day!
Why work with us? We believe in offering customized coverage to fit your unique needs coupled with the expert advice and guidance needed to navigate this confusing area.
Take just 5 minutes to complete our online form and get your no-obligation quote!