California workers compensation requirements decide exactly when you must carry coverage, who counts toward the threshold, and what it costs to skip it. This guide breaks down the California workers compensation requirements in plain English — the employee count that triggers the mandate, who is exempt, the penalty for going without, and how to get covered. All figures are from California sources, verified as of June 2026.
In This California Guide:
Is Workers’ Comp Required in California?
Yes, California requires every employer to carry workers compensation insurance starting with the very first employee, with no minimum employee threshold, under Labor Code Section 3700
California Workers’ Comp Requirements at a Glance
Here are the exact California workers compensation requirements every employer should know:
| Employees that trigger the mandate | 1 |
| Which workers count | All workers count toward the threshold including full-time, part-time, temporary, seasonal, and day laborers; coverage must be in place from the first day of employment; domestic/household employees have separate hour and wage thresholds (52 hours or 100 dollars earned in the 90 days before injury) |
| Who is exempt | Sole proprietors with no employees are not required to cover themselves but may voluntarily elect coverage; general partners may exclude themselves via written waiver to their insurer; LLC managing members are automatically included but may exclude themselves by written waiver; corporate officers and directors who own at least 10 percent of issued and outstanding stock may be excluded, and a 1 percent shareholder may also be excluded if a parent, grandparent, sibling, spouse, or child owns at least 10 percent and the officer has health insurance; a sole shareholder who is an officer or director is excluded unless they affirmatively elect coverage; domestic workers employed by a parent, spouse, or child are excluded |
| Owners & officers | Sole proprietors are automatically not covered and may opt in voluntarily; corporate officers must own at least 10 percent of stock or 1 percent with a 10-percent-owning family member plus health insurance and must file a written waiver with their carrier; general partners and LLC managing members may exclude themselves by filing a written waiver with their insurance carrier |
| Penalty for going without | First offense is a misdemeanor punishable by up to 1 year in county jail and/or a fine of double the premium that should have been paid with a minimum fine of 10000; second or subsequent offense carries up to 1 year in jail and/or triple the premium with a minimum fine of 50000; DLSE may impose the greater of twice the unpaid premium or 1500 per employee during the uninsured period up to a maximum of 100000; a stop-work order may be issued halting all business operations; per-employee penalty of 100 per employee at the time of the stop order; if an employee is injured while uninsured the employer faces 500 per employee and loses the exclusive-remedy shield, allowing the injured worker to sue directly with a presumption of employer negligence under Labor Code Section 3708 |
| Monopolistic state? | No — buy from private carriers |
| State fund | Yes, the State Compensation Insurance Fund (State Fund), a competitive state fund established in 1914 that serves as the insurer of last resort; website statefundca.com |
How to Get Workers’ Comp Coverage in California
Purchase a policy from a private insurer authorized to write workers compensation in California or from the State Compensation Insurance Fund; alternatively apply to self-insure by obtaining a Certificate of Consent to Self-Insure from the Director of Industrial Relations through the Office of Self-Insurance Plans, which requires at least 3 years of continuous business operation, 3 years of audited financial statements, an acceptable credit rating, a security deposit,
and use of a licensed third-party administrator for the first 3 years; group self-insurance is also available
Private market: YES
What Workers’ Comp Covers in California
Workers’ compensation is a no-fault system: an injured employee gets benefits without having to prove the employer did anything wrong, and in exchange gives up the right to sue for most workplace injuries. A typical California policy pays for medical treatment tied to a work injury, part of the wages lost while the worker recovers, longer-term disability benefits if the injury is permanent, and death benefits to a family.
It also includes employers-liability coverage, which protects the business if an injury still leads to a lawsuit. That trade-off is the practical heart of the California workers compensation requirements: the coverage exists to keep one bad injury from sinking both the worker and the business.
Employees vs. Independent Contractors in California
The most common way owners get the California workers compensation requirements wrong is by assuming a worker is an “independent contractor” who does not count. State agencies look at how the work is actually controlled, not the label on a 1099. If California decides a contractor was really an employee, the business can owe back premiums and penalties as if coverage should have been in place all along.
When you are close to the employee threshold, confirm each worker’s status with your state board before you decide you are exempt.
Other California workers’-comp rules: California is expanding workers compensation requirements to licensed contractors with no employees under SB 216 (2023) and SB 1455, with a full deadline of January 1, 2028, at which point all licensed contractors must carry workers compensation regardless of employee count; employers and insurers must approve or deny a claim within 90 days or it is presumed approved by law;
corporate officer stock ownership for exclusion purposes may be held in a revocable trust under SB 189 (2018); the State Compensation Insurance Fund serves as the guaranteed market so any employer unable to obtain private coverage can obtain it from State Fund
Understanding California Workers Compensation Requirements
The California workers compensation requirements exist to make sure injured employees get medical care and lost wages without having to sue. For most owners, the California workers compensation requirements come down to one number: the employee count that triggers the mandate, shown in the table above.
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Once you hit that count, California workers compensation requirements apply whether you planned for them or not, and the penalty for going without is real. If any part of the California workers compensation requirements is unclear for your business, your state workers’-comp board can confirm the threshold, the exemptions, and how to get covered.
Next step: Once you know what your business in California actually needs, comparing quotes from several carriers takes only a few minutes. Many owners do this right after they understand their state and trade requirements.
Frequently Asked Questions
Is workers’ comp required in California?
Yes, California requires every employer to carry workers compensation insurance starting with the very first employee, with no minimum employee threshold, under Labor Code Section 3700
What is the penalty for not having workers’ comp in California?
First offense is a misdemeanor punishable by up to 1 year in county jail and/or a fine of double the premium that should have been paid with a minimum fine of 10000; second or subsequent offense carries up to 1 year in jail and/or triple the premium with a minimum fine of 50000;
DLSE may impose the greater of twice the unpaid premium or 1500 per employee during the uninsured period up to a maximum of 100000; a stop-work order may be issued halting all business operations; per-employee penalty of 100 per employee at the time of the stop order; if an employee is injured while uninsured the employer faces 500 per employee and loses the exclusive-remedy shield,
allowing the injured worker to sue directly with a presumption of employer negligence under Labor Code Section 3708
Who is exempt from California workers’ comp?
Sole proprietors with no employees are not required to cover themselves but may voluntarily elect coverage; general partners may exclude themselves via written waiver to their insurer; LLC managing members are automatically included but may exclude themselves by written waiver; corporate officers and directors who own at least 10 percent of issued and outstanding stock may be excluded, and a 1 percent shareholder may also be excluded if a parent,
grandparent, sibling, spouse, or child owns at least 10 percent and the officer has health insurance; a sole shareholder who is an officer or director is excluded unless they affirmatively elect coverage; domestic workers employed by a parent, spouse, or child are excluded
Official California Sources & Resources
- California Division of Workers Compensation (DWC) under the Department of Industrial Relations (DIR): https://www.dir.ca.gov/dwc/
- California Workers’ Comp Statute: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=3700.&lawCode=LAB
- U.S. Department of Labor — Workers’ Comp: dol.gov
- U.S. Small Business Administration: sba.gov
These California workers compensation requirements were last verified against official sources in June 2026. Rules and penalties change — confirm the current figure with your state workers’-comp board or a licensed agent.
More California Business Insurance Guides
Disclaimer: This guide is informational only and is not insurance, legal, or tax advice. Business Insure Guide is an independent educational resource, not an insurance agency or carrier. Coverage needs, legal requirements, and prices vary by business, profession, and state and change over time. Always verify the exact requirement and price with a licensed insurance agent and your state before you buy.