Frequently Asked Questions

Common Questions About Workers’ Comp in California

What Small Businesses Need to Know about Workers’ Comp Insurance in California

More than a hundred years have passed since the first workers’ compensation law was enacted in the United States. Much like today’s laws, workers’ compensation insurance protected injured workers through medical and wage replacement benefits while protecting employers from being sued.

California was an early adopter, and in 1913, the state started requiring employers to carry workers’ compensation insurance. Today, California workers’ compensation is “the single largest privatized social benefit system in the world, second only to Social Security in the delivery of medical and indemnity benefits.”

After several generations of policy changes, it’s easy to feel lost among all the workers’ comp jargon, so here are the top 10 things every California small business owner should know about workers’ compensation insurance in The Golden State.

1. California law requires small business employers to carry workers’ compensation insurance

California small businesses must provide their employees with workers’ comp benefits under California Labor Code Section 3700.

2. Workers’ comp benefits must be provided to full-time and part-time California employees.

Individuals do not need written employment contracts to be considered employees, and the term “employee” can include legal and illegal aliens, minors, and prisoners. Independent contractors and subcontractors are also considered employees in most circumstances.

3. Who does not require workers’ compensation coverage?

Sole proprietors, partners, and officers of closely held corporations may not be considered employees unless specifically listed on a policy. Corporate officers who own at least 10% of the corporation’s stock may be exempted from coverage. Corporate officers or limited liability company (LLC) owners in the construction industry with at least a 10% stock ownership may exempt themselves from coverage; however, no more than three per corporation or LLC are allowed to be exempt.

4. There are five primary workers’ compensation insurance benefits: medical, disability, survivor, burial, and rehabilitation.

These workers’ comp benefits support employees who are injured due to a work-related injury or illness.

5. Workers’ compensation in California is a no-fault system.

For workplace injury or illness, workers’ compensation laws are no-fault, which means that the employer agrees to pay regardless of fault. As a result, you cannot claim common law defenses, including “assumption of risk,” the “fellow servant rule,” or “contributory negligence.”

6. The most substantial reforms in California workers' compensation history occurred in the past fifteen years.

Evidence-based medicine guidelines, mandatory utilization review process, and the repeal of vocational rehabilitation are just some of the reforms that disrupted the industry in the early 2000s. A decade later, Senate Bill 863 re-structured the California workers’ comp system and increased injured worker benefits, changes that drove more than $1 billion in savings by 2016.

7. California employers are required to give a Workers' Compensation pamphlet to all new employees.

California employers are required to give a Workers’ Compensation pamphlet to all new employees at the time of hire, or no later than the end of the first pay period. Lawsuits and fines can result from failure to inform employees of their rights in the workplace

8. One-time accidents are the most common type of work injury in California, with repetitive stress injuries coming in second place.

Backs, hands, and arms are the top three body parts injured in the workplace. When it comes to one-time accidents, slip-and-falls are the most common cause of workplace injury and being hit by an object is the second most common.

9. A formal return-to-work program is an easy way for small businesses to save on workers’ comp policy costs.

Return-to-work programs help recovering employees return to work in limited but productive capacities. These programs help lower an employer’s workers’ comp costs by reducing large claims for lost wages. Clear and organized procedures for workplace injuries help an employer and employee navigate the process from the moment an injury occurs.

10. California’s Division of Workers' Compensation holds the largest workers’ compensation educational conference in the state.

Speakers address current workers’ comp topics confronting claims administrators, medical providers, attorneys, rehabilitation counselors and others involved in workers’ compensation.

Extra Credit: Pie Insurance offers the newest workers’ comp insurance option for California’s small businesses.

We offer workers’ comp insurance exclusively for small businesses owners. Our easy online process enables small business owners to get a workers’ comp quote in less than three minutes.

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