What California Small Business Owners Need To Know About Workers Comp Insurance

While owning a small business can be incredibly rewarding, it also comes with several responsibilities, including providing workers’ compensation insurance for your employees.

Workers’ comp insurance is mandatory for all businesses in California, regardless of their size. This insurance is designed to protect both employees and employers in case of a work-related injury or illness.

This blog post discusses what small business owners in California need to know about workers’ comp insurance, and you can see more at https://www.employers.com/where-employers-does-business/california-workers-comp/.

What Is Workers’ Comp Insurance?

Workers’ comp insurance is a type of insurance that provides benefits to employees who are injured or become ill due to their work. These benefits can include medical treatment, lost wages, and disability benefits.

Workers’ comp insurance also protects employers by limiting their workplace injuries or illnesses liability. By offering workers’ compensation insurance, employers usually obtain immunity from lawsuits brought by their employees for job-related injuries or illnesses.

Who Needs Workers’ Comp Insurance?

All businesses in California that have employees are required to carry workers’ comp insurance. This includes full-time, part-time, and seasonal employees. Even if you only have one employee, you are still required to carry workers’ comp insurance.

There are some exceptions to this rule, however. Sole proprietors and partnerships are not required to carry workers’ comp insurance for themselves, but they are required to carry it for any employees they hire.

To ensure their eligibility for exclusion, corporate officers should become acquainted with California Labor Code Sections 3351 and 3352, which outline criteria such as ownership percentage, familial ties to governing members, and trust provisions. If there is uncertainty regarding eligibility, seeking advice from an attorney is recommended. Additionally, individuals seeking exclusion must submit an affidavit in the form of an election and file it with the state through WCRIB.

How Much Does Workers’ Comp Insurance Cost?

The cost of workers’ comp insurance varies depending on several factors, including the size of your business, your employees’ work, and your claims history. Generally speaking, the more employees you have and the more hazardous the work they do, the more expensive your workers’ comp insurance will be.

It’s noteworthy that California places a high value on the protection of workers’ well-being, which is reflected in the comprehensive coverage provided by its worker’s compensation insurance policies, which may come at a slightly higher cost compared to other states. This is partly due to the state’s high cost of living and the fact that California has some of the country’s most stringent workers’ comp regulations.

How Do You Purchase Workers’ Comp Insurance in California?

California employers can purchase insurance coverage from a private provider or the State Compensation Insurance Fund (SCIF). Unlike some states, California does not require employers to be declined coverage by a private insurance company before they can apply for coverage with SCIF.

What are the Consequences of Not Having Workers’ Comp Insurance?

In California, penalties related to workers’ compensation are severe. Failing to have coverage is considered a misdemeanor, and the consequences can be significant. The penalty may result in a county jail term of up to one year and/or a fine of no less than $10,000.00. If a second failure occurs, the penalty may include a one-year jail term and a fine of up to $50,000.


Workers’ comp insurance is an important consideration for small business owners in California. Although it may come with a cost, it’s crucial and offers vital benefits for both the staff and the company. If you are a small business owner in California, it’s important to understand your obligations under the law and ensure you comply.


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