Workers Compensation in California:
What Every Employer Must Know

Workers' compensation in California is not optional. It's not something you can skip until business picks up. The moment you have even one employee — part-time, full-time, seasonal, or family member — California law requires you to carry it. And the penalties for not having it are brutal.

High-risk trades like roofing and construction carry higher workers comp rates — but every industry has exposure.

Who is required to have workers comp in California?

Every California employer with one or more employees is required by law to carry workers' compensation insurance. This includes:

• Full-time and part-time employees
• Seasonal and temporary workers
• Family members you pay for work
• Out-of-state employees who occasionally work in California
• In some cases, even certain subcontractors

Sole proprietors and partners without employees are generally not required to carry it — but can opt in for themselves. Corporate officers can exclude themselves from coverage but must file specific forms to do so.

What does workers comp cover?

Workers' comp is actually four coverages in one policy:

• Medical treatment — all reasonable medical care for a work-related injury or illness, with no deductible or co-pay for the employee
• Temporary disability — wage replacement (typically 60–70% of gross wages) while the employee is recovering and unable to work
• Permanent disability — benefits if the injury results in lasting impairment that affects the employee's ability to earn a living
• Death benefits — payments to dependents if an employee is killed on the job

Workers' comp also covers employer's liability — protecting you if an injured employee sues you personally beyond the workers comp claim.

How much does it cost?

Workers comp premiums are calculated as a rate per $100 of payroll, and that rate depends heavily on your industry's risk classification. Examples of California base rates:

• Clerical workers / office: $0.20–$0.50 per $100 of payroll
• Retail / restaurant: $1.00–$3.00 per $100 of payroll
• Landscaping / janitorial: $4.00–$8.00 per $100 of payroll
• Roofing / construction: $10.00–$30.00+ per $100 of payroll

Your actual rate is also adjusted by your experience modification (ex-mod) — your claims history compared to similar businesses. A clean record lowers your rate; frequent claims raise it significantly.

What happens when an employee files a claim?

1. Employee reports injury to you (employer) within 30 days
2. You provide them with a DWC-1 claim form within one working day
3. Employee seeks medical treatment — you can direct them to a specific provider for the first 30 days if you have a Medical Provider Network (MPN)
4. Your insurer accepts or denies the claim (they have 90 days)
5. Benefits begin while the claim is investigated

Report claims to your insurer promptly. Delayed reporting is a red flag that can complicate the claim and increase costs.

How to lower your workers comp premiums

• Implement a written safety program — required by Cal/OSHA and rewarded by carriers
• Return-to-work program — light-duty assignments reduce temporary disability costs significantly
• Accurate job classification — misclassifying workers in higher-risk categories than their actual duties is the most common cause of overpaying
• Clean up your experience mod — report and manage claims early; small claims paid quickly cost less than contested ones
• Shop your policy annually — workers comp rates vary significantly between carriers. We shop 10+ markets every year for our clients.