Workers’ comp insurance aims to protect your business and employees against injuries and illnesses sustained on the job. The cost of carrying this type of insurance policy may increase in correspondence to the level of hazard the job poses. While past California law exempted some smaller contractors from carrying workers’ compensation, new regulations make it a requirement for all employers, regardless of how many employees they have.
This article clarifies workers’ comp requirements in California so that you can comply with current laws and regulations while protecting your business and employees.
Are Certain Employees Exempt?
By law, all employers must carry workers’ comp insurance in California, even if they have a single employee. This law is a departure from previous legislation that allowed some small businesses to operate without coverage. The new law takes into account that businesses need time to comply. While high-risk industries like construction must have workers’ comp insurance in place in 2023, others have until 2026 before noncompliance penalties apply, like fines, forced suspension of operations, or legal action.
Independent contractors and volunteers are exempt from these requirements. Partners and sole proprietors don’t receive coverage automatically but can opt in and purchase coverage. Domestic and agricultural workers and family members are also excluded from coverage. It’s best to get professional advice to understand if your situation qualifies for an exemption.
Construction contractors have unique requirements for workers’ comp insurance. Contractor requirements for operating a contracting business include furnishing a valid Certificate of Workers’ Compensation Insurance or a Certification of Self-Insurance to the Contractors State Licensing Board. Active businesses that have no current employees can file a signed exemption form. Contractors working in specific high-risk sectors, such as roofers, must have workers’ compensation insurance or a self-insurance certification with or without employees.
Understanding Workers’ Comp Insurance
Having an active workers’ compensation insurance policy in place protects your employees by providing financial compensation to anyone who has an injury or an illness caused by their job duties.
The purpose of this insurance for employees is to cover medical expenses and lost wages while the injured party recovers. Employers benefit by avoiding legal and financial consequences, such as fines and lawsuits.
What Does a Workers’ Comp Policy Cover?
The main elements of coverage in the state of California include:
- Medical care
- Temporary disability benefits
- Permanent disability benefits
- Supplemental job displacement benefits
- Return-to-work supplement
- Death benefits
The cost for coverage depends on your workers’ classifications and your annual payroll. While it can seem expensive, the cost of not having adequate coverage is much higher.
Do You Need Workers’ Comp Insurance?
Obtaining and maintaining an adequate insurance policy is essential to improve your employees’ safety and protect your business from the financial and legal consequences of noncompliance. However, the world of workers’ comp is often confusing if you have no prior experience navigating the policies and requirements. If you have any questions regarding your responsibilities in purchasing workers’ comp insurance, you can speak with a professional to obtain legal advice and ensure you remain in compliance with all laws.
In addition, working with our experts at Western Republic can help you secure the insurance coverage your business needs through a reputable insurance provider. Contact us today to speak with a team member and learn more about the coverage solutions we provide.