No one wants to send an employee home from the job for an injury - or worse yet, make a trip to the ER. While you do what you can to keep your team safe, sometimes accidents happen. Fortunately, there are things that you can do to help make sure that you and your employees are covered.
Who Needs Workers' Comp Insurance?
A 2023 law in California (SB216) expanded the list of contractors required to carry workers' compensation insurance. Before this law, only contractors with employees were typically required to have workers' comp insurance for their team.
SB216 expanded the list to contractors with employees and contractors without employees in certain class codes. Before SB216 went into effect, roofers were the only contractors required to carry workers' comp, even if they had no employees. In 2023, four additional class codes were added to the list. They are concrete, heating and air conditioning, tree service, and asbestos abatement contractors.
This list will further expand in coming years as 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 2023 requirements are contractors who are organized as a joint venture and have filed a certificate of exemption from workers' compensation.
What Happens if You Don't Carry Workers' Comp Insurance?
The penalties for not carrying workers' compensation insurance in California can be severe. The specific penalties depend on several factors, including the business size, the length of time it has been operating without workers' compensation insurance, and the number of employees who were not covered.
If a business in California is found to be operating without workers' compensation insurance, the employer may face penalties that can include:
Stop-Work Order: The California Division of Workers' Compensation (DWC) can issue a stop-work order, meaning the business must stop all operations until it obtains the necessary workers' compensation insurance.
Fines and Penalties: The DWC can assess penalties and fines against the employer for failing to carry workers' compensation insurance. Fines can be up to $100,000, depending on the circumstances.
Criminal Charges: Employers who knowingly fail to provide workers' compensation insurance can also face criminal charges, which can result in imprisonment.
It's crucial for businesses in California to comply with the state's workers' compensation insurance requirements to avoid potentially severe penalties and legal consequences.
How To Get Started with Workers' Comp Insurance
Aegis Insurance Markets helps contractors get covered. Our contractor insurance specialists can help you understand your insurance requirements under the law and assess your business risks.
Learn more about protecting your business from accidents, injuries, and penalties. Get a quote today.