CA Contractors Have New Workers' Compensation Requirements

A new California law requires all licensed contractors to carry workers' compensation insurance, whether or not they have employees.

CA Requires All Contractors to Carry Workers' Comp

The law, known as CA Senate Bill 216, or SB216, is being implemented in response to the tendency of many small contractors to claim that they have no employees, even though they regularly hire day laborers or undocumented aliens. This leaves these workers without any protection in the event of a work-related accident or illness.

Before SB216, roofing contractors were the only class code required to carry workers' compensation insurance even if they had no hired employees. In January 2023, four additional class codes were added to that list.

The law will be rolled out in two phases, with the following high-priority sectors being the first required to carry workers' compensation insurance effective January 2023: 

  • concrete
  • heating and air conditioning
  • asbestos abatement
  • tree service

All licensed contractors, including applicants for licensure, will be required to carry workers' compensation insurance from Jan. 1, 2026.

The only exception to the new requirements are contractors who are organized as a joint venture and have filed a certificate of exemption from workers' compensation.

What Are the Penalties for Not Carrying Workers' Comp in CA?

Failure to carry workers' compensation insurance will result in the Contractors State License Board suspending the license of any relevant contractors who did not have coverage between July 1, 2023, and Jan. 1, 2026.

What Does Workers' Compensation Do?

Workers' compensation insurance is crucial for protecting employees in the high-risk construction industry, which has the highest occurrence of work-related deaths and frequently cited OSHA workplace safety violations. The insurance ensures that workers do not have to pay high medical bills or lose wages in the event of a work-related accident or illness.

The introduction of SB 216 will ensure that all workers on job sites are protected and can work with peace of mind knowing that they have the necessary insurance coverage.

Get Workers' Comp for Contractors

Aegis Insurance Markets helps contractors get covered. Our contractor insurance specialists can help you understand your insurance requirements under the law, assess your business risks, and make a personalized recommendation for the right collection of policies to protect your business. 

Because we're brokers, we can shop through the top-rated insurance providers to find the best coverage for your construction business at the right price.

Get a free no-obligation quote for workers' compensation and other contractor insurance policies and ensure your business is protected against accidents, injuries, and penalties. Get a quote today.




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