10 FAQs About Workers Compensation Insurance in CA

Workers' compensation insurance is different from other types of commercial insurance policies. Unlike liability coverage or commercial property insurance, workers' comp is the one policy designed to protect your employees' financial interests. Depending on the state where you do business, it may also be the only insurance policy employers are required by law to carry.

10 FAQs About Workers' Compensation Insurance in CA

If you're running a business in CA, you'll definitely want to stay up-to-date with your business's latest workers' comp requirements. Here are ten of our commercial insurance clients' most common questions about workers' comp in California.

1. Is Workers' Compensation Insurance Mandatory In California?

Yes, workers' compensation insurance is mandatory for businesses with employees in California, even if the company only has one employee. If you are in the construction trades, you may be required to carry workers' comp even if you are a sole proprietor of your business with no employees.

2. Do Freelancers Need Workers' Compensation Insurance?

You are not mandated to carry this coverage if you are a freelance with no employees. While it's not required, sole proprietors and independent contractors should strongly consider purchasing workers' compensation insurance. In certain hazardous lines of work, you may be required to carry workers' comp insurance, even if you don't employ anyone else. If you subcontract work out to other freelancers or independent contractors, be sure your subcontractors carry workers' comp to protect yourself in the event one of their employees is injured while performing work on your behalf.

3. What Is The Cost Of CA Workers' Compensation Insurance?

California's estimated average employer rates for workers' compensation insurance are $1.61 per $100 in covered payroll. The cost is based on several factors, including payroll, location, number of employees, industry and risk factors, coverage limits, and claims history. Your workers' comp costs may vary depending on these factors. 

Request a no-obligation quote to get a better understanding of your workers' comp costs.

4. What Are The Penalties For Not Carrying Workers' Comp?

Failing to have workers' compensation coverage is a criminal offense in California. Penalties can include fines and/or imprisonment. The state may also issue penalties of up to $100,000 against illegally uninsured employers. If you've been putting off getting comp for your workers because of the cost, you could end up paying even more in penalties and court costs as a result of not being covered.

5. Does Workers' Compensation Insurance Cover Injuries Even If The Employee Is At Fault?

Yes, workers' compensation insurance is designed to cover the cost of work-related injuries, regardless of who was at fault. This is known as a "no-fault" system.

Workers' compensation works by paying for medical costs, lost wages, and, in a worst-case scenario, burial expenses and death benefits for dependents. When your employees get sick or injured as a result of their job, workers' comp ensures they do not suffer financially as a result. It also ensures your workers aren't suing you to help cover the costs of medical bills arising from a work-related injury or illness.

6. Who Oversees Workers' Compensation Insurance In California?

In California, workers' compensation insurance is administered by the Division of Workers' Compensation (DWC), which is part of the Department of Industrial Relations.

7. Are There Posting Requirements For Workers' Compensation?

California employers must post a notice in a conspicuous location informing employees of their rights and responsibilities under the state's workers' compensation system.

8. Are There Exceptions To Workers' Comp Requirements?

Certain types of businesses, such as sole proprietors and partnerships, may be exempt from the requirement to carry workers' compensation insurance. This is not the case in every industry, however. Licensed contractors working in the construction industry are not exempt from workers' comp requirements unless organized as a joint venture agreement and specifically file a certificate of exemption with the Contractors State Licensing Board.

9. What Additional Employee Benefits Are Required In California?

In addition to the basic benefits provided by workers' compensation insurance, California employers may also be required to provide additional benefits, such as family and medical leave, disability leave, and pregnancy disability leave. Find more information about California labor laws —including rest and meal breaks, minimum wage and overtime, safe and healthy work environments, and benefits if injured — at the Department of Industrial Relations.

10.  What Changes Were Made To Workers' Comp Requirements In 2023?

A 2023 law in California (SB216) expanded the list of contractors required to carry workers' compensation insurance to include those without employees in certain class codes, including:

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

This list will further expand in coming years, with all licensed contractors across every class code required to carry workers' compensation insurance effective Jan. 1, 2026.

Workers' compensation insurance is mandated in almost every state to help protect your employees in the event they are injured or become ill while performing their job duties. While workers' comp costs can sometimes cause an employer to hesitate to get this required coverage, the penalties for not carrying it can be even higher. Get workers' comp coverage to protect your employees and business against unnecessary lawsuits, financial losses, and legal penalties.

Do you have additional questions about this essential commercial insurance policy? Our commercial insurance professionals are standing by to help you determine how much insurance you need. Contact us at (800) 579-6369 or request a quote today.




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Truckee, California 96161
Phone (800) 579-6369
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