Workers’ Compensation in California

Workers’ Compensation Insurance California

When it comes to workers’ compensation, California employers are required to carry coverage. Workers’ compensation insurance, also known as workers’ comp, gives your employees benefits if they get a work-related injury or illness. These benefits include:¹

Medical treatment to help them recover and return to work.
Temporary disability payments if an injury prevents them from doing their usual job while recovering.
Permanent disability benefits if a doctor diagnoses them with an injury they can’t recover from. Depending on the injury or illness, some employees may be eligible for a life pension payment.
Supplemental job displacement vouchers, which help pay retraining costs if they return to work but can’t do their original job.
Death benefits for their family if they lose their life from a work-related injury or illness.
California employers can also benefit from workers’ comp insurance. It can help protect your Golden State business if your employee’s family sues you.

How Does Workers’ Compensation Work in California?

Workers’ compensation in California can help your employees if they get a work-related injury or illness. While the goal is to have your employee return to work, if an injury or illness is severe enough, it can require retraining or additional benefit payments. Workers’ compensation benefits get based on an employee’s average weekly wage. The actual amount varies, depending on the type of benefit.²

Is Workers’ Compensation Mandatory in California?

California businesses with at least one part-time or full-time employee must get workers’ compensation insurance. The state defines an employee as a person working for a company, whether the arrangement is:³

Expressed or implied
Oral or written
For lawful or unlawful unemployment

There are certain people who fall under the workers’ compensation exemption in California, such as:

Sole proprietors, who can elect to have coverage⁴
Executive officers and directors if they fully own the business⁵
LLC members who don’t work in the business

You also don’t need to include independent contractors under your workers’ compensation coverage. To help determine if a worker is an employee or independent contractor, you can use the ABC test explained in California Assembly Bill 5.

If you need workers’ compensation, California businesses can buy coverage from private insurance companies or the state fund for workers compensation. If you don’t have coverage, you’re violating California Labor Code. This means you can face a:⁶

$10,000 fine
One-year prison sentence
State penalty of up to $100,000

California Workers’ Compensation Law for Employers

Make sure you understand the workers’ compensation requirements in California. There are three things your business must do to follow the law:⁷

Get workers’ compensation coverage for your business and employees.
Provide a workers’ compensation pamphlet or brochure to new hires.
Post a “Notice to Employees” poster in the workplace.

Your employees may ask you, “Who pays for workers’ compensation?” California prevents you from having your employees pay for or offset the cost of this insurance. So, they won’t have a paycheck deduction for coverage like they would for health insurance or other benefits. In return, your employees generally can’t sue you if they get an injury or illness from work.

California Workers’ Comp Settlement Types

Workers’ compensation disputes can happen for many reasons. You may dispute whether an injury happened at work or an employee may have an issue with their workers’ compensation benefits.

Not all workers’ compensation claims get disputed or go to trial. If a case does go to trial, both parties may agree on a settlement beforehand. Depending on the circumstances, most employees can choose from two types of workers’ comp settlements:⁸

Stipulated Findings and Award

Injured workers may choose a Stipulated Findings and Award settlement if they need future medical care because of a permanent disability. The employer pays for the ongoing medical treatments in this type of settlement.⁹

Compromise and Release

A Compromise and Release settlement means an injured worker agrees to accept a one-time payment. Accepting the lump sum resolves the workers’ compensation claim.¹⁰

California Workers’ Compensation Claims

When you get a report of an injury at work, there are specific steps you have to take to file a workers’ compensation claim in California. Your employee has one year after the date of injury or illness to report and file a claim.

Within one business day after getting a report of injury, you have to give your employee a workers’ compensation claim form. After they submit the form, you have one business day to:

Provide a completed copy of the claim form to your employee.
Forward the claim form and your employee’s report of injury or occupational illness to your insurer or claims administrator. If you’re one of our customers, you can file a workers’ compensation claim on our website.
Authorize up to $10,000 in appropriate medical treatment.

Depending on the situation, you may also need to authorize light-duty work for your employee.

Get a Quote for Workers’ Compensation in California

Business owners have trusted us as their workers’ compensation insurance company for over 100 years. Whether you need help getting workers’ compensation coverage or filing a claim, we’ve got your back. Get a quote today and learn more about how we can help protect you and your employees.

^1,4,5,6,7 State of California Department of Industrial Relations, “Answers to Frequently Asked Questions About Workers’ Compensation for Employees”

² State of California Department of Industrial Relations, “Workers’ Compensation Benefits”

³ Justia Law, “California Labor Code 3551”

^8,9.10 State of California Department of Industrial Relations, “Division of Workers’ Compensation: Permanent Disability Rating Determination”

Workers’ Compensation California