California workers’ compensation insurance
Workers' compensation insurance covers the cost of work-related injuries. It's required for all California businesses that have employees.
Who needs workers’ comp insurance in California?
Each state has different workers’ compensation laws, and in California, workers’ compensation insurance is mandatory for all employers.
Even if a company has just one employee, California businesses are required to provide workers’ compensation coverage for any employees who regularly work for them, including if the business is headquartered in a different state.
Additionally, contractors who are licensed in certain areas, such as concrete, HVAC systems, roofing, and tree services, must carry workers' comp or a Certification of Self-Insurance even if they don't have employees.
Do you need workers’ compensation if you are self-employed?
Sole proprietors and independent contractors are strongly encouraged to buy workers' comp even when it's not required.
If you get injured on the job, a workers' comp policy can help pay your medical expenses and provide part of the wages you lose during your temporary disability.
Your personal health insurance provider might deny a claim if your injury is related to your work, which would leave you paying these bills on your own.
Whether or not you’re able to get workers’ compensation depends on the type of business and the ownership structure. Regardless, if you’re self-employed, it’s a good idea to check with the California Department of Industrial Relations to determine what your rights and liabilities are so that you can be sure that you’re properly insured.
Is workers’ comp required for part-time employees?
The number of hours an employee works does not affect their entitlement to workers’ compensation. It’s possible to get an independent contractor workers’ compensation waiver, but California law presumes anyone who works for an employer to be an employee.
If a claim is filed, the burden is on the employer to prove that someone is an independent contractor and not an employee.
How much does workers' compensation insurance cost in California?
Estimated employer costs for workers’ compensation in California are $1.34 per $100 of covered wages [PDF].
Your workers' comp insurance cost is calculated based on a few factors, including:
- Payroll
- Location
- Number of employees
- Industry and risk factors
- Coverage limits
- Claims history
How do you buy workers' compensation insurance in California?
There are three ways to buy a workers' comp coverage in the state of California:
- You can buy it from a private insurance carrier. With TechInsurance, you can submit an easy online application to compare quotes from top-rated insurers.
- You can buy it from the state fund. California has a competitive state fund for workers' compensation: StateFund First.
- You can self-insure your business. Employers who meet certain requirements, including at least three years in business, can apply to the Office of Self-Insurance Plans (OSIP) for approval.
How does workers’ comp work in California?
Employers and employees are both protected by workers’ compensation settlements. California has created laws to streamline the process of making sure that an injured worker can quickly receive benefits, while the employer is protected from lengthy and expensive litigation and lost productivity.
Policies usually include employer's liability insurance, which can help cover legal expenses if an employee blames their employer for an injury.
California workers' compensation provides coverage for:
- Emergency response to work accidents
- Wages lost during recovery
- Ongoing treatment for work injuries
- Lawsuits blaming the employer for injury
For example, if an IT tech or software developer is diagnosed with carpal tunnel syndrome due to keyboard overuse, your workers' comp policy would pay for their medical bills, including long-term medication and physical therapy.
Or, if an employee at your IT consulting firm trips in the office stairwell and suffers a concussion, then your workers' comp policy would pay for their ambulance ride and emergency room visit.
Often, the employer, employee, and workers’ comp insurer can reach an agreement without difficulty. However, the California DWC Information and Assistance Unit can help settle disputes and guide the parties through litigation if an issue cannot be resolved any other way.
The California Department of Industrial Relations regulates workers’ comp insurance. California employers and workers can find resources for all aspects of workers’ compensation claims and laws through the agency’s Division of Workers’ Compensation (DWC).
What are the penalties for not having workers' comp insurance?
Failure to carry workers’ compensation insurance in California is a criminal offense. The penalties include:
- A stop order is typically issued to the business, violation of which could result in a fine of $10,000 or more and imprisonment in county jail for up to one year.
- The Uninsured Employer’s Benefit Trust Fund could file a lien against an employer’s property if it needs to pay benefits to an injured worker of an illegally uninsured employer.
- A penalty assessed by the Division of Labor Standards Enforcement could be twice the amount the employer would have paid in premiums during the time of uninsurance or $1,500 per employee during the period of uninsurance.
If a worker is injured and the employer did not have workers’ comp, the employer could be liable for a penalty of $10,000 per employee at the time of injury if the case is compensable, or $2,000 per employee at the time of injury if that particular case was found to be non-compensable. The maximum penalty is $100,000.
Workers’ comp settlements in California
There are two types of workers’ comp settlements in California:
Stipulated findings and award. This is when the injured worker and the insurance company agree on the extent of disability and benefits, resulting in biweekly payments unless there’s a financial need for benefits to be paid upfront. The insurance company would continue to pay for future medical treatment. The injured worker might be able to reopen a case if the medical condition becomes worse within five years.
Compromise and release. An injured worker is paid a lump sum that closes the case. Any future medical care would not be covered, even if it is related to the injury.
Any settlement would need to be approved by a California workers’ comp judge. There’s often an informal hearing before the judge. Although the insurance company would handle this, it’s good for the employer to remain informed about the ongoing progress of settlement negotiations in case it becomes the subject of later litigation.
Statutes of limitations for workers’ compensation claims
An injured employee has one year to file a workers’ comp claim. California regulators can extend that time under certain circumstances:
- If the worker is under 18 at the time of injury, the one-year statute of limitations would begin when the person becomes a legal adult.
- If there is a repetitive stress injury, the worker may file a claim up to one year from the date that they became aware of the injury.
- A worker has up to five years from the date of injury to file a claim if the original injury caused additional or further injury.
