California Takes Workers' Comp Seriously
I've watched contractors lose their licenses over workers' compensation violations. California enforces this aggressively, and the penalties for operating without coverage can sink a small business overnight.
The Basic Rule
If you have even one employee, you need workers' compensation insurance. Full stop. It doesn't matter if they're part-time, seasonal, or your cousin who helps out on weekends. One employee triggers the requirement.
This applies to full-time crews, part-time helpers, seasonal labor during busy stretches, and family members on payroll. If you're cutting them a check and they're doing work for your business, they need to be covered.
The Sole Proprietor Question
Working by yourself with no employees? You're technically exempt from mandatory coverage. But there's more to this than meets the eye.
Many general contractors won't let you on their job sites without proof of workers' comp, even if you're a one-person operation. Some project owners require it regardless of your employee count. Getting hurt without coverage means medical bills and lost income come out of your pocket.
Voluntary coverage for sole proprietors typically runs $1,200 to $2,500 annually, depending on your trade. That's a reasonable price for peace of mind when you're working on roofs or running power tools.
What Coverage Actually Provides
California workers' comp pays for all reasonable medical treatment, wage replacement at roughly two-thirds of your average weekly pay, compensation for permanent injuries or disabilities, death benefits for surviving family members, and vocational retraining when someone can't return to their previous work.
You don't get to pick and choose. The law mandates all of this. That's what your premium is buying.
When Things Go Wrong
Operating without required coverage opens you up to serious consequences.
| Violation | What Happens | |-----------|---------| | First offense | Up to $100,000 fine | | Second or later | Additional penalties | | Willful violation | Misdemeanor charges possible | | Any violation | Stop work order on your projects |
Beyond the fines, you become personally responsible for all medical costs, lost wages, and legal fees. I've seen a single back injury turn into a six-figure liability for an uninsured contractor.
How Rates Work
Workers' comp pricing is based on your classification code and total payroll. Each trade has a rate per $100 of payroll.
| Classification | Approximate Rate per $100 Payroll | |---------------|----------------------| | Office Staff (8810) | $0.25 - $0.40 | | Carpentry (5403) | $8.00 - $12.00 | | Plumbing (5183) | $4.00 - $6.00 | | Electrical (5190) | $3.50 - $5.50 | | Roofing (5551) | $18.00 - $28.00 |
Rates fluctuate based on market conditions and carrier appetite. Roofing contractors often struggle to find affordable coverage through standard markets.
Getting Coverage
You have options. Private insurance carriers are the most common choice, with competitive pricing for contractors with clean records. The State Compensation Insurance Fund provides a safety net if private markets decline your application. Self-insurance is available for larger contractors who meet strict financial requirements.
Most California contractors go through private carriers. We work with markets that specialize in construction, which matters when you have classification complexities or challenging claims history.
Keeping Costs Manageable
Document your safety program. Formal training, regular safety meetings, and proper equipment usage all signal to underwriters that you're a lower risk.
Classify your employees correctly from day one. Misclassification leads to audit surprises that can cost thousands.
Implement a return-to-work program. Getting injured employees back on modified duty faster reduces your claim costs and keeps your experience mod down.
Shop the market. Rates vary significantly between carriers for the same risk. Last month we moved a plumbing contractor to a new carrier and cut their premium by 32% without changing any coverage.
Common Questions
Do 1099 subcontractors need workers' comp?
Not if they're legitimately independent with their own coverage. But if they don't have a policy and get hurt on your site, you could be on the hook. Always collect certificates.
Can I use an out-of-state policy in California?
Your policy must specifically list California as a covered state. Most policies can add California with a simple endorsement, but don't assume it's included automatically.
What if an uninsured worker gets injured?
You pay for everything out of pocket and face the penalties listed above. This scenario has bankrupted more than a few contractors I've known over the years.