Workers’ Compensation Coverage for Companies in California
Virtually all companies in California need to get Workers’ Compensation coverage. Failure to could result in financial penalties and civil litigation from employees.
California requires almost all companies, even those with just one employee, to have Workers’ Compensation coverage. This includes companies that employ part-time or seasonal workers. California provides some Workers’ Compensation exemptions. Be wary of using them, as doing so might make you ineligible for benefits. California has some of the most severe consequences for companies that do not comply with its Workers’ Compensation mandates, including expensive fines and jail time. Companies that are uncovered also risk being sued by employees that are hurt at work.
Call our California Workers’ Compensation insurance brokers at (866) 340-9120 so that NPN Brokers can begin the process of finding coverage for your company today.
Employees that Must Be Covered by Workers’ Compensation in California
If you own a company that employs various types of workers in California, you will most likely have to purchase a Workers’ Compensation policy. Coverage is mandated based on the size of a workforce, not on the types of employees that make up that workforce.
California is a state with one of the strictest Workers’ Compensation laws. In California, all companies that employ even one worker need liability insurance. This is true for every single company throughout the state, even those in very low-risk industries, according to Cal. Lab. Code § 3700.
California does not make distinctions between types of workers. For example, part-time, full-time, and seasonal workers are treated the same for Workers’ Compensation purposes. Migrant workers are also covered by Workers’ Compensation and are entitled to benefits in California.
This means that a company that employs just one worker, no matter the type of work that employee does or what their schedule is, has to have a Workers’ Compensation policy in place at all times in California.
Workers’ Compensation Coverage Exemptions for Companies in California
There are several types of workers that are exempt from needing Workers’ Compensation coverage in California because they do not meet the definition of an employee.
According to Cal. Lab. Code § 3352(a)(1), those employed as domestic servants by their spouse, parent, or child are not considered employees under California’s Workers’ Compensation code and do not need to be included in a company’s policy.
Specific LLC members and corporate officers can also exclude themselves from Workers’ Compensation, provided they own a certain percentage of a company in California. Partners in partnerships can also refuse coverage if they choose. Furthermore, sole proprietors and independent contractors are also exempt from needing Workers’ Compensation. That said, companies can choose to refrain from using exemptions and get a policy from our Workers’ Compensation insurance brokers that provides coverage for all workers. When individuals choose to exempt themselves from Workers’ Compensation, they waive the right to recover benefits if hurt on the job in California.
If you plan on using exemptions to lower your company’s Workers’ Compensation, make sure that you qualify. Suppose you do not and fail to notify the proper agencies. In that case, you might unknowingly be out of compliance with California’s Workers’ Compensation laws, making you and your company vulnerable to serious consequences. Employers can compare the responsibilities of their workers against California’s definition of an employee as provided in Cal. Lab. Code § 3351.5.
Workers’ Compensation Penalties for Non-Compliant Companies in California
Because California is strict regarding company adherence to its Workers’ Compensation mandates, it imposes serious financial and criminal consequences on employers that fail to comply.
Fines for Failure to Post Workers’ Comp Information
Companies in California must post a poster regarding Workers’ Compensation in an area of the workspace that employees can easily see. This poster must include information about a company’s Workers’ Compensation insurance policy and the medical professionals that are part of California’s Workers’ Compensation medical system. The poster should also provide guidance to employees about what they should do if they are injured at work. If your company does not have Workers’ Compensation in California, it cannot post this information. Failure to do so can result in a fine of up to $7,000. This fine is levied per violation, meaning if you are reported again for failure to provide the necessary Workers’ Compensation information to employees, your company might be fined an additional $7,000 in California.
Fines for a Lack of Coverage
Not having Workers’ Compensation is a serious offense in California. The first consequence companies can receive for not complying with Workers’ Compensation requirements is a stop-work order. This means that all company operations must halt until your business gets the proper coverage. If a stop-work order is violated, an employer might be given 60 days in jail, a fine of $10,000, or both.
In addition to a stop-work order, companies in California will face financial penalties for non-compliance. Fines for non-compliance are two times the amount a company should have paid in Workers’ Compensation for the time they were uncovered over the past several years or a fine of $1,500 per worker employed by a company for the time it was uncovered, whichever amount is greater. Additional financial penalties might be implemented for companies that continue to ignore California’s Workers’ Compensation requirements. Non-compliance with Workers’ Compensation mandates is a misdemeanor offense punishable by one year in jail, a $10,000 fine, or both.
Civil Action from Employees
If your company does not get Workers’ Compensation when required to, it can be vulnerable to civil litigation from employees hurt on the job in California. The only thing that protects a company from employee lawsuits is having Workers’ Compensation insurance. When that remedy is removed, injured workers can sue their employers for compensation in California.
Find a Workers’ Compensation Policy for Your California Company
Call (866) 340-9120 to speak with the Workers’ Compensation insurance brokers at NPN Brokers today.
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