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The employer’s guide to California workers’ comp insurance

  • California

Have a California business? Trying to figure out workers’ comp? Hey, you’re on the right page. Here’s what you need to know about workers’ compensation insurance in California—in simple language.

Quick Index:

  1. Is workers’ comp insurance required in California?
  2. What happens if I don’t get workers’ comp in California?
  3. Do business owners have to buy workers’ comp for themselves?
  4. How do I get workers’ comp in California?
  5. What is the cost of workers’ comp in California?
  6. What are the workers’ compensation insurance limits in California?
  7. What does workers’ comp cover in California?
  8. What should I do if my California employee is injured and needs workers’ comp?

Is workers’ comp insurance actually required in California?

Yes. If you have a business in California and have hired at least one employee—full or part-time—you’re required to have workers’ comp insurance. “One employee” means just about any employee, even a temporary one. The state of California does make some exceptions in the case of directors, owners, and family members. (To get a better idea of whether one of these exceptions applies to your company, take a look at the full rules here.)

Now, if you are the only worker in your California business, you’re not required to buy workers’ compensation insurance for yourself.

(Have more questions? We’ve got you. Here’s more information on whether you need to get workers’ comp in California.)

What happens if I don’t get workers’ comp in California?

Buckle up—this isn’t pretty. Here’s what can happen if you don’t get workers’ comp coverage for your California business.

  1. You could personally face fines (ranging between $10,000 and $100,000) and jail time.
  2. The state of California could issue a “stop order”—which means you’ll need to stop employing people until you get workers’ comp coverage for your company.
  3. You could wind up paying your employee’s medical bills (which is, by the way, what workers’ comp is supposed to do).
  4. An employee could sue you. And, since California doesn’t enforce a financial cap on these lawsuits, the cost of a settlement could be very expensive.
  5. Whenever you do purchase workers’ comp, it will probably be much more expensive.

(Read more about what happens if you don’t get workers’ comp in California).

In the end, any money you might save by going without workers’ comp coverage is not worth the risk—to you or to your employees. Get workers’ comp.

I own a business in California. Do I need to purchase workers’ comp for myself? Can I exclude any officers?

Sole proprietors in California are not required to purchase workers’ comp coverage for themselves. However, some business owners do anyway. (It’s kind of an unusual situation because worker’s comp is not usually the best insurance option for a sole proprietor. Not every insurer will allow you to purchase coverage for yourself alone.)

The situation gets a little more complex as your company gets bigger, especially if your company is a corporation. That’s why we’ve put together an entire article on the subject:

Tap here to learn more about how to exclude owners and officers in California.

How do I get workers’ comp in California?

Well, there are two ways.

  1. You can get coverage the old-fashioned way. In other words, you’ll find a broker, fill out a lengthy questionnaire, provide any necessary supporting paperwork, and then wait for a quote. The entire process can take a few weeks to complete. (Learn more about buying workers’ comp here.)
  2. You can get workers’ comp the digital way (it’s all online and takes about 5 to 7 minutes).

What is the cost of workers’ comp in California?

First, you should know that your workers’ comp rate is calculated based on the size of your payroll—the larger the payroll, the more you’ll pay. (Of course, there are other factors, such as the industry you’re in. You can read more here about how workers’ comp rates are calculated.)

So, how much will you pay? Well, the average cost for workers’ comp in California is about $3 per $100 of payroll. But your rate will vary, depending on where you are and what kind of business you run. (The easiest way to find out what you’ll pay is to get an instant estimate here.)

What are the workers’ compensation insurance limits in California?

The neat thing about workers’ comp is that you won’t ever have to worry about your limits. All coverages are set by the state of California. Nice, right? Also, there is technically no financial limit to the amount an insurance company pays in the event of an incident. A serious injury resulting in a disability might require financial payments and medical support for the rest of a worker’s life, and workers’ comp coverage would provide these benefits without a time limit.

Because of that, you really don’t need to make any coverage decisions—when you provide information about your business, your rate will automatically be calculated based on payroll and other factors.

Read more about whether you need to purchase workers’ comp for your California business.

So, what does workers’ comp cover in California?

Workers’ comp pays for lost wages and medical expenses if one of your employees has an illness or injury related to their job. For example, your employee could claim workers’ comp benefits if they injured themselves while lifting a heavy box at work—or even for a repetitive use injury like carpal tunnel syndrome. If the worst happens, workers’ comp will also pay death benefits. You can read more here about what workers’ comp insurance covers.

Note that workers’ comp doesn’t usually cover injuries that happen on “off the clock” times like lunch breaks. It also won’t cover incidents that happen on the commute. (And though we probably don’t need to say this, workers’ comp won’t cover an injury that happens because an employee committed a crime on the job.)

What should I do if my California employee is injured?

Don’t panic. Here’s what to do first.

  1. Make sure your employee gets medical treatment if they need it. This is the most important thing. Get help first—then figure out next steps.
  2. If it’s a serious injury, call the nearest office of the California Division of Occupational Safety and Health to make a report. (You can grab the number for the nearest office here.)
  3. Tell your online small business insurance company.

Those are just the first steps. Go here to get full information for how to handle an employee injury in California.

Hey, if you’re ready for an instant estimate on workers’ comp, we can get you one in less time than it takes to brew a cup of coffee. Everything is online. Everything is easy.


All content on this page is for general informational purposes only and does not apply to any specific case, is not legal, tax or insurance advice and should not be relied upon. If you have any questions about the situation for your small business or the latest information in your state, you should contact an attorney for legal advice, an insurance agent or broker, and/or your state's labor or industry agency, board, commission or department. Please note that the information provided on this page may change at any time as a result of legislative action, court decisions or rules adopted or amended by any state or the federal government.

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