Who Is Required to Carry Workers' Comp in California?
California requires most employers with one or more employees to carry workers' compensation. Here's who's covered, the contractor rule, and the limited exceptions.
Key Takeaways
- One or more employees generally triggers the requirement.
- Part-time and seasonal workers count as employees.
- Licensed contractors must carry coverage or file a valid exemption.
- Some owners can opt out depending on entity type and elections.
- Going uninsured carries penalties and personal liability risk.
The One-Employee Rule
California generally requires workers' compensation when an employer has one or more employees, including part-time and seasonal workers. The requirement applies regardless of the number of hours worked.
Contractors and the CSLB Rule
Licensed contractors must carry workers' comp and disclose coverage status to the Contractors State License Board. Even contractors with no employees must file a valid exemption, and active coverage is commonly required to pull permits.
Can Owners Exclude Themselves?
Depending on entity type—sole proprietor, partnership, LLC, or corporation—owners may be able to exclude themselves by filing the proper election. Corporations and LLCs with actively engaged members typically must include them unless they opt out correctly. Rules vary by structure.
What About Independent Contractors?
True independent contractors are not employees, but California uses specific tests to determine status. Misclassifying an employee as a contractor can create liability for unpaid premiums and benefits.