California Workers' Compensation: A Guide for Contractors

Workers' compensation is mandatory for most California employers. Understanding the requirements protects both you and your workers.

Who Needs Workers' Comp?

In California, you must carry workers' comp if you:

• Have any employees (even one part-time worker)
• Regularly employ workers, regardless of hours
• Pay wages to anyone other than independent contractors

Exemptions

Limited exemptions exist:

• Sole proprietors with no employees may opt out
• Certain family members may be excluded
• Corporate officers can sometimes waive coverage

Warning: Even with exemptions, you may still need coverage for CSLB licensing.

CSLB Requirements

The CSLB requires proof of workers' comp unless you:

• Certify you have no employees
• File a Certificate of Exemption
• Re-certify annually

If you hire your first employee, you must obtain coverage immediately.

What Workers' Comp Covers

• Medical expenses for work injuries
• Temporary disability payments
• Permanent disability payments
• Supplemental job displacement benefits
• Death benefits to survivors

Understanding Your Costs

Premiums are based on:

• Classification code - Riskier trades pay more
• Experience modification rate - Your claims history
• Payroll - Higher payroll = higher premium

Typical Rates by Trade

Trade	Rate per $100 Payroll
Carpentry	$8 - $15
Electrical	$4 - $8
Plumbing	$5 - $10
Roofing	$20 - $40

Reducing Your Costs

1. Implement a safety program - Fewer injuries = lower rates
2. Return-to-work programs - Get injured workers back faster
3. Accurate classification - Don't overpay for wrong codes
4. Shop around - Compare carriers annually
5. Consider a PEO - May offer better group rates

Working with Subcontractors

Always verify subcontractor coverage:

• Request certificates of insurance
• Verify coverage is current
• Require additional insured status

If a subcontractor doesn't have coverage, you may be liable for their injured workers.

Need help managing subcontractor compliance? Bidroom verifies contractor credentials automatically.