Workers’ Comp in California: What Every Small Business Owner Should Know
If you have employees in California, workers' compensation insurance isn't optional. California generally requires every employer with employees to carry workers' comp, even if you only have one employee, and even if that employee is a family member.
What Workers' Comp Covers
Workers' compensation helps pay for an employee's work-related injury or illness, including:
Medical treatment
Temporary and permanent disability benefits
Supplemental job displacement benefits
Death benefits for dependents
Most policies also include employer's liability coverage, which helps protect your business if it's sued over a workplace injury.
The Risks of Going Without
California takes uninsured employers seriously. Depending on the situation, a business without required coverage can face:
Stop orders that prohibit using employee labor until coverage is in place
Significant fines and penalties, which can be assessed per employee
Criminal charges, since failing to carry required coverage can be a misdemeanor
Personal liability for the full cost of an injured worker's claim
Employers also can't ask employees to help pay the workers' comp premium.
What Affects Your Premium
Industry classification: Each job type has its own rate. A roofer costs more to insure than an office worker.
Payroll: Premiums are generally based on payroll, so accurate estimates matter.
Experience modification: Your claims history can raise or lower your rate over time.
Getting your job classifications right is one of the easiest ways to avoid overpaying, or getting a surprise bill at audit time.
Tips to Keep Costs Down
Review your employee classifications every year.
Report payroll accurately to avoid audit surprises.
Invest in workplace safety and return-to-work programs.
Report injuries promptly.
Get Help With Your Coverage
Whether you're hiring your first employee or reviewing an existing policy, we can help. Learn more about workers' compensation insurance or call (818) 459-3400.
This article is for general information only and isn't legal advice. For specific legal requirements, consult the California Department of Industrial Relations or an attorney. Amik Gasparyan Insurance Agency, Farmers Insurance agent, CA License #6014107.