Workers comp coverage required in California
Employers with one or more employees must carry workers' compensation insurance. Verified 2026-05-09.
Who must carry workers comp in California?
California workers compensation coverage is required Employers with one or more employees must carry workers' compensation insurance.
The threshold language matters: states write the rule slightly differently. Some count any worker, some count only W-2 employees, some count owners separately, some have industry-specific exemptions (agriculture, domestic service, casual labor). For a California employer with a non-trivial workforce, the safest default is: assume coverage is required and confirm with the state department of insurance or a local agent.
How the threshold interacts with 1099s and subs
California's AB 5 (ABC test) makes it difficult to classify workers as independent contractors (1099); misclassification can lead to significant penalties and workers' compensation liability. General contractors are responsible for ensuring subcontractors carry workers' compensation insurance; otherwise, the general contractor may be liable for injuries to the subcontractor's employees.
Penalty for going without
Failure to carry workers' compensation insurance can result in stop orders, fines up to $100,000, and potential criminal charges. The financial penalty is usually a fraction of the human cost: an injured employee at an uncovered employer can sue directly under tort law instead of being limited to the workers comp benefit, exposing the owner to lost-wage damages, pain and suffering, and punitive damages without the corporate veil.
Related reading
FAQs
Who has to carry workers comp in California?
Employers with one or more employees must carry workers' compensation insurance.
When does the requirement kick in for a new California employer?
The clock starts on the first day the first qualifying employee is on the books. California does not have a grace period for new employers, so a policy needs to be bound on or before the first hire date. Some agents can issue same-day binders for low-risk class codes.
What is the penalty for not having workers comp in California?
Failure to carry workers' compensation insurance can result in stop orders, fines up to $100,000, and potential criminal charges.
Do 1099 contractors trigger the coverage requirement in California?
California's AB 5 (ABC test) makes it difficult to classify workers as independent contractors (1099); misclassification can lead to significant penalties and workers' compensation liability.
Are subcontractors counted toward the threshold in California?
General contractors are responsible for ensuring subcontractors carry workers' compensation insurance; otherwise, the general contractor may be liable for injuries to the subcontractor's employees.
What happens if I am audited and found non-compliant in California?
California typically issues a stop-work order, assesses back premium for the period of non-coverage, and adds penalties on top. Specifically: Failure to carry workers' compensation insurance can result in stop orders, fines up to $100,000, and potential criminal charges. Severe or repeat violations can lead to criminal charges and personal liability for the business owner, separate from the corporate veil.