What happens if I don't get workers' comp in California?
There are quite a few consequences to going without workers’ comp in California, and none of them are good.
If you don’t get workers’ comp for your business, you could personally face fines and jail time. You could also be forced to stop employing workers. If an employee is injured while you’re uninsured, you will be liable for any bills related to the injury or illness and could even face a lawsuit in civil court.
Let’s go through some of these possible outcomes:
1) You could face fines and jail time.
If you hire employees in the state of California and do not purchase workers’ compensation insurance, the state considers you guilty of a criminal offense. (Really. See section 3700.5 of the California Labor Code.)
That means they could charge you a fine of at least $10,000 (up to $100,000), put you in the county jail for up to a year, or both.
2) You could be forced to stop operating your business.
In some cases, the state of California will issue a “stop order,” which means that you will have to stop employing people until you purchase workers’ compensation insurance for your business.
3) You could be stuck paying a huge stack of medical bills.
Among other things, workers’ comp covers an employee’s medical bills if they are injured on the job. But if your employee gets injured at work and you don’t have workers’ compensation coverage?
Yep. You’ll be paying for all of those bills.
4) You could be sued by your employee.
If you don’t have workers’ compensation coverage at the time of a workplace injury, your employee has the legal right to file a personal injury claim against you in civil court. And, since there’s no financial cap on these claims in the state of California, the cost of the settlement can be pretty hefty.
5) Your cost for workers’ comp could go up significantly.
Finally, if you ever do decide to get workers’ comp coverage, your cost will likely be more than it would have been had you obeyed the law in the first place.
Insurance carriers always check for lapses in workers’ comp coverage before giving you a quote. And if an insurer finds that you’ve had a period where your employees were working without coverage, they’ll quote you a higher rate or decline to cover you at all. (That means you could be stuck purchasing coverage from the state—at a much higher cost.)
In the end, going without workers’ compensation insurance is a huge financial risk with very little upside. (The good news? If your California business is uninsured, you can fix the situation in less time than it takes to make coffee.)