Does California require workers’ compensation insurance?
Yes. California requires workers' compensation from the first employee: Labor Code 3700 makes every employer secure it, and the Division of Workers' Compensation says that holds even with only one employee. There is no head-count floor. Owners with no employees have no one to cover, and qualifying corporate officers, general partners, and LLC managing members can opt out of their own coverage by signing a written waiver that the business's carrier accepts.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
How many employees before California requires workers' comp?
California has no minimum head count. Labor Code 3700 requires every employer except the state to secure workers' compensation, and Labor Code 3351 counts anyone working under a contract of hire, oral or written, as an employee, including anyone who is an employee under the three-part test in Labor Code 2775. The Division of Workers' Compensation puts it plainly: one employee is enough.
A household worker is excluded if, in the 90 days before an injury, the job was under 52 hours or paid $100 or less (Labor Code 3352(a)(8)). Some contractors need a policy with no employees at all: the Contractors State License Board requires it of every active C-8 concrete, C-20 HVAC, C-22 asbestos abatement, C-39 roofing, and C-61/D-49 tree service licensee.
Source: DIR Division of Workers' Compensation, Employer information, checked .
Which owners, officers, and family members are exempt in California?
Paid corporate officers and directors are employees under Labor Code 3351(c), as are partners and LLC members paid wages regardless of profits (3351(f)). Under Labor Code 3352(a), these can opt out by a written waiver signed under penalty of perjury: an officer or director owning at least 10 percent of the stock (1 percent with health coverage when a close relative owns 10 percent), any general partner or LLC managing member, and a professional corporation's owner-practitioner with health coverage. A sole-shareholder officer is excluded unless the corporation elects coverage.
A sole proprietor is not their own employee; the DWC notes an owner who wants coverage needs it written into the policy. Relatives on a business payroll are employees like anyone else. A waiver takes effect when the carrier accepts it and lasts until withdrawn in writing.
Source: California Labor Code 3352, checked .
What happens to a California employer with no workers' comp?
The Labor Commissioner serves an uninsured employer a stop order barring the use of employee labor until coverage is in place (Labor Code 3710.1), plus a penalty under Labor Code 3722: $1,500 per employee, or, if uninsured more than a week in the past year, the greater of twice the premium owed or $1,500 per employee for the period. Knowingly going without is also a misdemeanor (3700.5): up to a year in county jail and a fine of at least $10,000, or $50,000 on a repeat conviction.
An injured worker of an uninsured employer can sue in civil court while also claiming benefits (Labor Code 3715), and the DWC's Uninsured Employers Benefit Trust Fund may pay the worker, then pursue the employer through liens on property.
Source: California Labor Code 3722, checked .
Who enforces workers' comp in California?
The Labor Commissioner's Office, part of the Department of Industrial Relations, enforces the requirement through its Bureau of Field Enforcement, which issues stop orders and penalty assessments. The DIR's Division of Workers' Compensation runs the claims system, the Department of Insurance licenses carriers, and the Contractors State License Board checks coverage for contractor licenses.
Source: California Labor Commissioner, Bureau of Field Enforcement, checked .
Where do California employers buy coverage?
California has a competitive state fund. An employer can buy from any carrier licensed by the Department of Insurance or from the State Compensation Insurance Fund, which must be fairly competitive with other insurers (Insurance Code 11775). Under Insurance Code 11784, State Fund cannot refuse a risk tendered with the premium unless it fails safety requirements or exceeds what the fund can safely carry, so it is the fallback when private carriers decline. Large employers can self-insure with a certificate from the Director of Industrial Relations.
Source: California Insurance Code 11784, checked .
Who sets the class codes and rates in California?
California is not an NCCI state. Under Insurance Code 11734 the Insurance Commissioner designates one rating organization to run experience rating, statistical reporting, and the classification system: the Workers' Compensation Insurance Rating Bureau of California (WCIRB), which the DWC calls the Commissioner's licensed statistical agent. Class codes and experience mods come from the WCIRB's California system, not NCCI's manual. Each carrier files its own rates with the Department of Insurance, so price varies by carrier.
Source: California Insurance Code 11734, checked .
Is there an exemption or waiver form in California?
California has no statewide waiver certificate for a business with no employees; an owner with no one on payroll has no one to cover. Two filings exist. An eligible officer, partner, or managing member gives the Labor Code 3352 waiver to the business's carrier, so it sits alongside a policy rather than replacing one. A licensed contractor with no employees files the Contractors State License Board's Exemption from Workers' Compensation instead of a certificate of insurance, unless the license uses a Responsible Managing Employee or a class that must carry coverage.
The CSLB exemption ends when the contractor hires anyone covered by workers' comp law; proof of coverage is due to CSLB within 90 days. A general contractor can still require a sub to carry a policy by contract.
Source: CSLB, Workers' Compensation Requirements, checked .
Sorting out California workers' comp for your business
Tell Redoubt what the business does, who works in it, and what the California requirement in front of you says. We will say whether a policy, a waiver, or an exclusion fits.
This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.
Workers’ comp requirements in every state
Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.
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The hub, and the California pages that go deeper
California workers’ comp FAQ
Do I need workers' comp in California with only one employee?+
Yes. Labor Code 3700 applies to every employer, and the Division of Workers' Compensation says the requirement holds even with one employee. Part-time and family employees on the business payroll count.
Can a California LLC owner skip workers' comp?+
With no employees, there is no one to insure. A member paid wages regardless of profits is an employee under Labor Code 3351(f), but a managing member can opt out by a written waiver under 3352(a)(17). Roofing, concrete, HVAC, asbestos, and tree service contractors need a policy either way.
Are 1099 workers covered by workers' comp in California?+
Often, yes. Labor Code 3351(i) counts anyone who is an employee under the three-part test in Labor Code 2775, whatever tax form they get. Unless the worker is free from your control, works outside your usual business, and runs an independent business of that kind, they belong on your policy, subject to the Labor Code's listed exceptions.