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Workers’ Compensation · California Employers

Workers’ comp for California employers.

Required coverage for businesses with employees in California, priced on payroll and job classifications, compared across carriers.

Quick answer Workers' compensation insurance pays injured employees' medical care and lost wages, and California requires employers to carry it even with a single employee, including part-time workers.

Workers' comp covers treatment for work-related injuries and illnesses, and its employer's liability part covers certain lawsuits related to employee injuries.
Operating without workers' comp is illegal in California and can bring penalties and stop orders.
Workers' comp is priced by payroll per classification code, adjusted for claims experience and carrier factors, and actual payroll is reviewed at audit.
Whether independent contractors need coverage depends on whether they're legally employees, and California presumes workers are employees unless specific tests are met.
Business owners can often be included or excluded depending on business structure, and contractors should also check CSLB requirements.

By Sam Alishahi · CA Insurance License #4348151 · Reviewed November 2026 · En español · How this page is researched

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Why it matters

Required once you have an employee

California requires employers to carry workers’ compensation insurance, even with a single employee, including part-time workers.

Operating without it is illegal in California and can bring penalties and stop orders. Workers’ comp pays injured employees’ medical care and lost wages.

Medical careTreatment for work-related injuries and illnesses.
Wage replacementTemporary and permanent disability benefits.
Employer’s liabilityCertain lawsuits related to employee injuries.
PricingBased on payroll by classification code, adjusted by claims experience, with actual payroll checked at audit.

Common situations

Employers I help

First employee

Coverage in place before someone starts work.

Contractors

Coverage that keeps a CSLB license active. The 2028 workers’ comp change

Audit surprises

Accurate class codes and payroll estimates.

High-risk trades

Specialty and state fund options. Contractor insurance

Restaurants and retail

Workers’ comp alongside a BOP. See details

Independent contractors

Understanding when workers count as employees.

Before you call

What underwriters will ask

Having these ready means I can go to market on the first call. The quote form asks for the same things, and anything you don’t know yet can wait.

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Business: operations and years in business.
Employees: job duties and number of workers.
Payroll: estimated annual payroll by job type.
Subcontractors: amounts paid and their insurance.
History: loss runs for the last three to five years.
Start date: when coverage is needed.

What California comp pays an injured worker

California's Division of Workers' Compensation (DWC) describes five benefits, each with its own trigger:

Medical care: paid by the employer for as long as it is medically necessary, within the state's medical treatment utilization schedule (MTUS). For 2004-or-later injuries, chiropractic, physical therapy and occupational therapy are each limited to 24 visits unless the claims administrator authorizes more or post-surgical rehab applies. While a claim is still being investigated, treatment is limited to $10,000. In a medical provider network (MPN), network doctors treat unless the employee predesignated a personal doctor before the injury.
Temporary disability: begins when the doctor says the employee can't do their usual work for more than three days, or after an overnight hospital stay. It generally pays two-thirds of the gross wages lost, up to a weekly maximum set by law. For injuries on or after January 1, 2008, it can't run more than 104 weeks within five years of the injury; certain long-term injuries can reach 240 weeks.
Permanent disability: paid when a lasting disability reduces earning capacity, even if the employee goes back to work. The amount depends on the disability rating, the injury date and pre-injury wages.
Supplemental job displacement voucher: for injuries on or after January 1, 2013, a $6,000 retraining voucher, regardless of disability level, when the injury leaves a permanent partial disability and you don't offer regular, modified or alternative work within 60 days of the claims administrator getting the medical report. The offer must pay at least 85% of pre-injury earnings and be expected to last at least 12 months. A worker who gets the voucher may also qualify for a one-time $5,000 return-to-work supplement.
Death benefits: payments to a spouse, children or other dependents when a worker dies from a job injury or illness.

If you can offer modified work on those terms, tell the adjuster early. Other states set their own benefits.

Part Two: employer's liability and its limits

Part One of a comp policy pays the state benefits above. Part Two, employer's liability, is for lawsuits. The statistical plan of the Workers' Compensation Insurance Rating Bureau of California (WCIRB) defines employer's liability as any liability, other than for workers' compensation, that California law puts on an employer for damages because of an employee's work injury or death, insured alongside the comp policy.

Why carry it if comp is the employee's remedy? IRMI and the standard policy wording point to cases like these:

Third-party-over: your injured employee sues someone else, and that party then tries to hold you responsible for the damages.
Consequential bodily injury: a spouse, child, parent, brother or sister claims their own injury as a direct result of the employee's work injury.
Dual capacity: the employee sues you in a role other than employer, for example as the maker of the product that hurt them.

On the standard policy form, Part Two limits are printed in Item 3.B of the Information Page and work three ways: an each-accident limit for bodily injury by accident, an each-employee limit for bodily injury by disease, and a disease policy limit that caps all disease claims together. Once a limit is paid out, the insurer pays nothing more under it. California policies must use forms the Insurance Commissioner approved; your limits are what your Information Page shows. If a lease or contract names employer's liability limits, send it with your application so the quote matches.

How the WCIRB sets your experience mod

In California the WCIRB publishes your experience modification from data insurers report, and its statistical plan requires that it be applied to the policy premium.

When you get one: the WCIRB totals your experience-period payroll by class code and multiplies each total by that class's expected loss rate. If the sum meets the eligibility threshold, you are experience rated. The WCIRB sets that premium threshold and adjusts it every year.
Which years count: your rating effective date follows your policy start date. The experience period begins four years and nine months before that date and ends one year and nine months before it.
What it measures: actual losses (medical and indemnity costs paid or expected to be paid) divided by expected losses for a business your size in your industry.
How claims are counted: since 2017 the formula gives full weight to each claim's primary portion (from $4,500 to $75,000 depending on employer size) and no weight to the excess. Starting with 2019 mods, the first $250 of each claim is removed.
When it can change: the WCIRB can't revise a mod just because a claim's value changed, only in limited cases such as a claim declared non-compensable, a subrogation recovery, a material ownership change or a reclassification after a WCIRB inspection.

Open-claim reserves count as losses; ask your insurer how yours are set. More: what an experience mod is.

The premium audit and uninsured subs

The WCIRB's statistical plan sets California's audit rules. A physical audit is an auditor's examination of your books of account and original payroll records, on site or remotely; a voluntary audit is based on a payroll statement you sign. Larger policies must get a physical audit at least once a year, and every policy insuring a C-39 roofing contractor gets a physical audit of the complete policy period.

Payroll, defined: all money and substitutes for money earned during the policy period by employees and officers, including gross wages, salaries, commissions, bonuses, overtime, the market value of gifts, and vacation, holiday and sick pay. Employees and officers excluded from the policy are left out.
Splitting one person between class codes: allowed only if you kept original time cards or time book entries showing each employee's pay by operation. Payroll can't be divided by percentages, averages or estimates. Without the records, that employee's whole pay goes to the highest-rated class for any part of their work.
Dual-wage construction classes: for hourly workers, the wage must be backed by original time cards showing operations, daily hours and start and stop times, or by a valid collective bargaining agreement with an employee roster.
Subcontractors: under Labor Code 2750.5, a person doing work that requires a contractor's license must hold one to be treated as an independent contractor. State Fund tells its policyholders to get a certificate of comp insurance from every sub that has employees and proof that each sub is licensed; an unlicensed sub doing license-required work is treated as an employee, and 1099 payments to uninsured or unlicensed workers may be added to audited payroll case by case.

Collect both before a sub starts. See what a premium audit is and comp and 1099 contractors.

Questions

Workers’ comp, answered

Is workers’ comp required in California?

Yes. California requires employers to carry workers’ compensation insurance, even with one employee.

How is workers’ comp priced?

By payroll per classification code, adjusted for claims experience and carrier factors. Actual payroll is reviewed at audit.

Do I need workers’ comp for independent contractors?

It depends on whether they’re legally employees. California presumes workers are employees unless specific tests are met.

Do business owners need to be covered?

Owners can often be included or excluded depending on business structure. Contractors should also check CSLB requirements.

Does my experience mod reset if I switch workers' comp insurers in California?

No. The WCIRB calculates the mod from payroll and losses under any policy that started within your experience period, so history from a prior insurer still counts.

Do you offer workers’ compensation insurance outside California?

Yes. Clients across the country send the same quote form. Sam Alishahi is licensed in all 50 states and Washington, DC and places policies there directly. The shopping across carriers works the same way. Rules, minimums and markets differ by state — see insurance requirements by state.

Official sources

Often placed alongside this

Coverage

Contractor insurance

Workers’ comp and liability that clear the contract.

See coverage Coverage

General liability insurance

Coverage for injuries and damage your business causes others.

See coverage Coverage

Security guard company insurance

Liability, workers' comp and bonds for private patrol operators.

See coverage Question

Do I need workers’ comp with no employees?

Sole proprietors, the five classifications that need it anyway, and the 2028 change.

Read the answer

Questions people ask: Is workers’ comp required for part-time employees? Does general liability cover employee injuries? Do subcontractors need their own insurance in California? What is an experience modification rate (EMR) and how does it affect contractors? Do I need workers' comp for 1099 contractors? What is an insurance premium audit? Who is exempt from workers’ comp in California? Does an uninsured contractor waiver protect you in California? What happens if your workers’ comp lapses in California? How Do High-Risk Businesses Get Workers’ Comp in California?

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By state: Insurance requirements by state

Workers’ comp

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Alishahi Insurance · Saman Alishahi, independent insurance broker, California License #4348151. General information, not a quote or a promise of coverage; coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.

Did you know?

A short video from Sam

Video thumbnail: In California, even one employee means workers' comp — **Did you know?** In California, even one employee means workers' comp

Under a minute each. Videos use an AI-generated version of Sam’s likeness and voice. General information only; coverage depends on your policy.

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