Workers Compensation for California Contractors

In California, contractors are required by the Contractor State Licensing Board (CSLB) to carry valid workers compensation insurance if they employ one or more employees. Additionally, contractors are required to have workers comp, regardless of whether they have employees, if they fall into one of the following licensing categories:

  • C-8 Concrete Contractor
  • C-20 Warm-Air Heating, Ventilating and AC contractors, 
  • C-22 Asbestos Abatement contractors
  • C-39 roofing contractors
  • C-61/D-49 tree service contractors

Performing work as a licensed contractor in California without workers comp in scenarios when it’s required could result in a license suspension from the CSLB. 

What is worker’s compensation?

Worker’s compensation is a crucial insurance coverage that is meant to protect workers from unforeseen work-related injuries or illnesses. Workers' compensation benefits include medical expenses, rehabilitation, and replacement income during recovery from a work-related injury or illness. It is essential for contractors to have this coverage to ensure that their employees are taken care of in case of work-related accidents, as these can result in significant financial strain on the employer or employee.

Benefits of workers compensation

Workers' compensation provides several benefits for both employees and employers. For employees, it ensures they receive medical treatment and financial support if they suffer a work-related injury or illness. It covers medical expenses, rehabilitation costs, and a portion of lost wages during recovery. Workers' compensation also provides disability benefits if the injury results in long-term or permanent disability. For employers, workers' compensation insurance helps protect them from potential lawsuits by providing coverage for workplace injuries. It promotes a safer work environment and boosts employee morale by demonstrating a commitment to their well-being.

Why is workers compensation necessary?

Workers' compensation is necessary for several reasons. First and foremost, it ensures that employees receive proper medical care and financial assistance in case of work-related injuries or illnesses. It provides a safety net for workers and helps them recover and return to work more quickly. Additionally, workers' compensation is a legal requirement in most jurisdictions, including California. Employers who fail to carry workers' compensation insurance may face severe penalties, fines, and potential litigation. It also helps maintain a fair and equitable system where employees are protected, and employers have a structured process to handle workplace injuries.

Contractor workers face various risks in their line of work. These risks can include accidents on construction sites, exposure to hazardous materials, falls from heights, equipment malfunctions, and repetitive motion injuries. They are also susceptible to musculoskeletal disorders, electrical hazards, respiratory problems, and more. The nature of contractor work often involves physically demanding tasks and work environments that pose inherent risks. Without proper workers' compensation coverage, these workers may face significant financial burdens and potential hardships if they suffer injuries or illnesses related to their work.

Importance of Compensation in Contractor Work

Compensation in contractor work is of utmost importance because it provides financial protection and support to workers in the event of work-related injuries or illnesses. Contractors often work in physically demanding and hazardous environments, making them more prone to accidents and injuries. Compensation ensures that contractors can access medical treatment and receive wage replacement benefits while they recover. It helps alleviate the financial burden and allows them to focus on rehabilitation without worrying about lost income. Additionally, compensation coverage contributes to a safer work environment by incentivizing contractors and employers to prioritize safety measures and risk mitigation.

Consequences of contracting without workers compensation in California

The CSLB will take disciplinary action or impose severe penalties against any contractor that does not have a proper Workers’ Comp Policy in place. Not only does the CSLB regulate this coverage but many project managers will request proof of workers’ comp insurance before allowing a contractor on the job.

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How to file for worker’s compensation insurance as a company

Below is a detailed step-by-step guide on how to obtain workers' compensation insurance in California:

Step 1: Understand Workers' Compensation Insurance

Before diving into the process, it's essential to have a clear understanding of workers' compensation insurance. It is a mandatory form of insurance that provides medical benefits and wage replacement to employees who are injured or become ill due to work-related activities. It also protects employers from potential lawsuits related to workplace injuries.

Step 2: Determine Your Insurance Requirements

The requirements for workers' compensation insurance can vary depending on factors such as the nature of your business, the number of employees you have, and the type of work they perform. In California, most employers are required to carry workers' compensation insurance, even if they have only one employee. However, there are a few exceptions, such as self-employed individuals and certain types of corporate officers. Ensure you understand the specific requirements that apply to your business.

Step 3: Find an Insurance Provider

Once you understand your insurance requirements, it's time to find an insurance provider that offers workers' compensation coverage. Start by researching different insurance companies that operate in California and specialize in workers' compensation insurance. Look for reputable providers with experience in your industry and positive customer reviews.

Step 4: Obtain Quotes

Contact the insurance providers you have shortlisted and request quotes for workers' compensation insurance. To receive accurate quotes, you'll need to provide information about your business, such as the number of employees, their job duties, and your payroll information. Gather these details beforehand to expedite the process.

Step 5: Compare Coverage and Costs

Review the quotes you receive and compare the coverage options and costs provided by each insurance provider. Ensure that the policies meet your specific needs and provide adequate coverage for your employees. Pay attention to factors such as coverage limits, deductibles, and additional services offered. Choose a provider that offers a balance between comprehensive coverage and competitive pricing.

Step 6: Complete the Application

Once you have chosen an insurance provider, contact them to initiate the application process. They will guide you through the required paperwork, which typically includes an application form that collects information about your business, payroll records, and other relevant details. Provide accurate and complete information to ensure the application process goes smoothly.

Step 7: Underwriting and Approval

After submitting your application, the insurance company will conduct underwriting, which involves assessing the risk associated with providing coverage to your business. They may request additional documentation or perform inspections of your workplace to evaluate the safety measures in place. Once the underwriting process is complete and your application is approved, you'll receive a policy contract.

Step 8: Pay the Premium

Upon approval of your application, the insurance provider will issue an invoice for the premium amount. The premium is the cost you pay for the workers' compensation coverage. Pay the premium as per the agreed-upon terms, which are usually outlined in the invoice. Failure to pay the premium may result in a cancellation of the policy.

Step 9: Display the Required Notices

As an employer in California, you are required to display specific notices about workers' compensation insurance in a conspicuous location accessible to all employees. Ensure you comply with these notice requirements to inform your employees about their rights and how to file a claim.

Step 10: Maintain Compliance

Once you have obtained workers' compensation insurance, it's crucial to maintain compliance with California's regulations. This includes timely premium payments, accurate record-keeping, reporting any workplace injuries to your insurance provider, and cooperating with the claims process.

Remember, while this guide provides a general overview of the process, it's always recommended to consult with a qualified insurance professional or attorney familiar with California workers' compensation laws for personalized guidance tailored to your specific business needs. If you require any assistance, SuretyNow has licensed professionals that can answer any questions you have.

Common mistakes when filing workers compensation with the CSLB

Here are the common mistakes that contractors make when getting their workers compensation insurance and filing it with the CSLB.

  1. Entering Incorrect Business Name in Section #3 "Insured"
  2. Entering Incorrect Insurance Company Name in Section #4 "Insurer(s) Affording Coverage"
  3. Entering Incorrect Policy Number  in Section #6 "Policy Number"
  4. Not Listing CSLB as Certificate Holder in Section #9 "Certificate Holder"
  5. Entering an Invalid Signature in Section #10 "Authorized Representative"

Who is exempt from having to provide worker’s compensation to CSLB?

According to the California Contractors State License Board, if you meet any of the following criteria, you cannot exempt yourself from providing compensation insurance. 

  • You employ anyone in a manner that is subject to California workers' compensation laws.
  • Your license is qualified by a Responsible Managing Employee (RME).
  • You hold a C-8 Concrete classification, C-20 Warm-Air Heating, Ventilating and Air-Conditioning classification, C-22 Asbestos Abatement classification, C-39 Roofing classification, and/or C-61/D-49 Tree Service classification.

If none of these items apply to you, you are eligible for exemption from obtaining the compensation insurance.

California Contractor Workers Compensation Eligibility & Claims Process 

Eligibility Criteria for California Contractor Workers Compensation

To be eligible for workers' compensation in California, contractor workers must meet certain criteria. Firstly, they must be classified as employees rather than independent contractors. This determination is based on factors such as control over work hours, supervision, tools and equipment provided, and the degree of independence in performing the work. Secondly, the injury or illness must arise out of and occur in the course of employment. This means that the injury or illness must be work-related and occur during work hours or while engaged in work-related activities.

What is a Workers' Compensation Claim?

In California, a workers' compensation claim is a formal request made by an injured or ill worker to receive benefits under the workers' compensation system. It is a legal process that begins when an injured worker notifies their employer about the injury or illness and seeks medical treatment. The claim seeks to establish that the injury or illness is work-related and requests compensation for medical expenses, disability benefits, and other related costs.

How to File a Worker's Compensation Claim

Filing a workers' compensation claim in California involves the following steps, according to the California Contractor State License Board:

Step 1 Notify Your Employer: Immediately report the injury or illness to your employer. Provide them with written notice and ensure it includes details about the incident, such as the date, time, and location.

Step 2 Seek Medical Treatment: Obtain medical treatment for your injury or illness as soon as possible. Inform the medical provider that your condition is work-related.

Step 3 Complete a DWC-1 Form: Request a workers' compensation claim form (DWC-1) from your employer or their insurance company. Fill out the employee portion of the form, describing your injury or illness in detail.

Step 4 Submit the DWC-1 Form: Once completed, return the DWC-1 form to your employer or their insurance company. Keep a copy for your records.

Step 5 Investigate the Claim: Your employer's insurance company will investigate your claim. They may contact you or your employer for additional information.

Step 6 Receive a Decision: The insurance company will notify you in writing about their decision regarding your claim. If approved, you will receive benefits as outlined in California's workers' compensation laws. If denied, you have the right to appeal the decision.

Time Limits for Filing a Workers’ Compensation Claim

In California, there are specific time limits for filing a workers' compensation claim. Generally, you should notify your employer of your injury or illness as soon as possible, preferably within 30 days. However, failure to provide notice within 30 days does not automatically invalidate your claim. You have up to one year from the date of injury or the date you became aware of the work-related illness to file a claim. It's crucial to file your claim promptly to avoid potential complications or arguments about the timeliness of your reporting.

Cost of Compensation Premiums

The cost of workers' compensation premiums in California is determined by several factors. Insurance companies consider the following when calculating premiums: the size of your payroll, the classification of your employees' job duties, your claims history, and the industry in which your business operates. Premiums are typically expressed as a rate per $100 of payroll, and the total premium is calculated by multiplying the rate by your payroll amount.

Factors that Influence Premiums

Several factors can influence workers' compensation policy premiums in California. These factors include:

Industry Classification: Different industries have varying levels of risk associated with them. Insurance companies assess the likelihood of workplace injuries in specific industries and adjust premiums accordingly.

Claims History: A business with a history of frequent and costly workers' compensation claims may face higher premiums. Insurance companies consider the past claims history to gauge the risk associated with insuring the business.

Payroll Amount: The total payroll of your business is a significant factor in determining premiums. Higher payroll amounts generally result in higher premiums since the insurance coverage must extend to a larger number of employees.

Safety Measures and Risk Management: Insurance companies may offer discounts or lower premiums to businesses that have robust safety programs and effective risk management practices. Demonstrating a commitment to workplace safety can positively influence premium costs.

Ways to Lower California Contractor Workers' Compensation Premiums

Here are some ways to lower workers' compensation premiums for California contractor workers:

Implement Safety Programs: Establish comprehensive safety programs that prioritize workplace safety and accident prevention. This can include regular safety training, enforcing safety protocols, conducting safety inspections, and promoting a culture of safety among your employees.

Maintain a Clean Claims History: Minimize the number and severity of workplace injuries and illnesses by focusing on safety and implementing effective risk management strategies. Promptly report and address any workplace incidents to prevent them from escalating into costly claims.

Maintain Accurate Payroll Records: Ensure that your payroll records accurately reflect the classifications and wages of your employees. This helps avoid overestimating your payroll, which can result in higher premiums.

Proper Classification of Employees: Classify your employees accurately based on their job duties. Different job classifications have varying risk levels, and assigning employees to the correct classification can prevent overpayment of premiums.

Evaluate Insurance Providers: Shop around and obtain quotes from different insurance providers to compare premiums and coverage options. Look for insurers that specialize in workers' compensation for contractors and have experience in your industry.

Experience Modification Rate (EMR): Understand and monitor your EMR, which is a factor that adjusts your premium based on your claims history. Implement effective safety measures and risk management strategies to keep your EMR low.

Safety Incentive Programs: Implement safety incentive programs that reward employees for maintaining a safe work environment and adhering to safety protocols. This can promote a safety-conscious culture and reduce the likelihood of accidents.

Seek Professional Guidance: Consider consulting with insurance brokers or risk management consultants who specialize in workers' compensation for contractors. They can provide personalized advice and help you navigate the complexities of workers' compensation insurance.


In conclusion, California contractor workers' compensation is an essential insurance coverage that protects employees from work-related accidents. Employers should ensure they comply with the law and have adequate insurance coverage. Meanwhile, workers should understand their eligibility and file claims within the allotted time limits. By taking the necessary steps, both employers and employees can benefit from the protection provided by compensation insurance.