California Workers' Comp Insurance

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California law provides several potential workers' comp insurance exemptions based on business ownership, worker classification and industry.

• Sole proprietors: Generally, they don't need coverage for themselves if they have no employees, unless another law, such as a contractor licensing requirement, applies.
• Corporate officers and business owners: Certain corporate officers, directors, general partners and managing LLC members can elect to be excluded if they satisfy the conditions under Labor Code §§3351–3352.
• Independent contractors: Properly classified independent contractors generally don't require employee workers' comp coverage from the hiring business. California's worker-classification rules, including Labor Code §2775, determine when workers must be treated as employees, subject to statutory exceptions.
• Certain licensed contractors: California requires active concrete (C-8), HVAC (C-20), asbestos abatement (C-22), roofing (C-39) and tree service (D-49) contractors to carry workers' comp even without employees, under Business and Professions Code §7125.

An exemption for the owner doesn't automatically exempt the business from covering its employees. Employers should verify eligibility before operating without coverage.

Businesses that fail to maintain required workers' compensation coverage can face criminal penalties, civil fines, work stoppages and direct responsibility for workplace injury claims. Penalties depend on the violation and circumstances, and multiple consequences may apply.

California employers have ongoing responsibilities beyond purchasing coverage:

• Employee notices: Post required workers' compensation information in the workplace and explain available benefits and claims procedures to new hires. This is required by Labor Code §§3550–3551 and Title 8 CCR §9880.
• Claims documentation: When an employee reports a qualifying work-related injury, provide a DWC 1 claim form and notice of potential eligibility within one working day.
• Injury reporting: Injuries involving lost work beyond the day of injury or medical treatment beyond first aid generally require reporting to the claims administrator within five days under Labor Code §6409.1 and Title 8 CCR §14001.
• Serious injury reporting: Contact Cal/OSHA immediately, generally within eight hours of learning about a work-related death, serious injury or serious illness.
• Retaliation protections: Workers cannot be fired, threatened or otherwise discriminated against for filing or intending to file a workers' compensation claim. These protections are established under Labor Code §132a.
• Workplace safety: Maintain a compliant injury and illness prevention program and applicable injury records. Requirements are established under Labor Code §6401.7 and Title 8 CCR §3203.
• Premium payments: Workers' compensation premiums are the employer's responsibility. California law prohibits passing these costs to employees through wage deductions under Labor Code §3751.

When an employee is injured or becomes ill because of work, they notify their employer and begin the workers' compensation claims process. The business helps initiate the claim, while the insurance company or claims administrator evaluates eligibility, coordinates covered benefits and manages payment.

Here's how the process typically works in California:

1. Employee reports the injury: Employees should notify their employer as soon as possible after a work-related injury or illness. California Labor Code §5400 generally requires notice within 30 days, subject to exceptions.
2. Employer provides a claim form: Within one working day of learning about a qualifying injury, the employer must provide the employee with a DWC 1 claim form and information about potential workers' compensation benefits.
3. Employee submits the claim: The employee completes and returns their portion of the DWC 1 form. The employer then fills out the remaining section, provides a copy to the employee and forwards the paperwork to its claims administrator.
4. Medical treatment begins: Necessary treatment should not be delayed while the claim is being reviewed. California requires authorization of appropriate medical treatment within one working day of receiving the claim form, with up to $10,000 available during the investigation period.
5. Insurer evaluates the claim: The insurer or claims administrator investigates whether the injury qualifies for coverage and determines applicable benefits. Under Labor Code §5402, most claims have a 90-day decision period before a presumption of compensability applies, with shorter periods for certain specified injuries.
6. Employee returns to work: Recovery may involve temporary restrictions, modified duties or alternative assignments based on the treating physician's assessment. Eligible employees may also qualify for specific return-to-work protections or supplemental job displacement benefits if suitable work is unavailable.

Employers are responsible for maintaining coverage, responding promptly to reported injuries, submitting required documentation and respecting medical work restrictions. The insurer or claims administrator typically handles claim decisions and benefit payments, but the business still has legal obligations throughout the process.