Do I need workers compensation insurance?

Workers' Compensation Insurance Requirements in California

In California, if you have employees, you are generally required to carry workers' compensation insurance. This insurance covers medical expenses and lost wages for employees who get injured or become ill due to work-related activities.

Who Must Have Workers' Compensation Insurance?

• Employers with one or more employees: Even if you have only one employee, you must provide workers' compensation coverage.
• Full-time, part-time, and temporary employees: All types of employees are covered under this requirement.
• Corporate officers: Coverage may be required unless they have formally excluded themselves.

Exceptions and Special Cases

• Independent contractors: Typically not covered, but classification must be accurate to avoid penalties.
• Family members: Certain family members working in a family-owned business may be exempt.
• Volunteers: Usually not covered unless specified by law or contract.

Operational Considerations

• Business registration: Ensure your business is properly registered to comply with insurance and reporting requirements.
• Insurance providers: Obtain coverage from a licensed insurance carrier or through the state fund.
• Recordkeeping: Maintain detailed records of employee information, payroll, and claims for compliance and audits.
• Payroll impact: Workers' compensation premiums are often based on payroll amounts and job classifications.
• Employee classification: Correct classification affects premium rates and compliance.

As of 2026, failure to carry required workers' compensation insurance can result in significant fines, stop-work orders, and liability for employee claims. It is essential to secure coverage before hiring employees to maintain smooth business operations in California.