Workers’ Compensation Insurance California
California law requires every employer — even those with just one part-time employee — to carry workers’ compensation insurance. Workers’ comp protects your employees if they suffer a work-related injury or illness, and it protects your business from potentially devastating liability.
Covered benefits include:
• Medical treatment to help employees recover and return to work
• Temporary disability payments if an injury prevents them from doing their usual job while recovering
• Permanent disability benefits for long-term or career-ending injuries
• Life pension payments for qualifying permanent disabilities
• Supplemental job displacement vouchers to cover retraining costs
• Death benefits for an employee’s family if a work-related injury or illness is fatal
Workers’ comp also protects you as an employer. In exchange for providing coverage, California generally prevents employees from suing you directly for workplace injuries.
Workers’ Compensation Insurance California
California law requires every employer — even those with just one part-time employee — to carry workers’ compensation insurance. Workers’ comp protects your employees if they suffer a work-related injury or illness, and it protects your business from potentially devastating liability.
Covered benefits include:
• Medical treatment to help employees recover and return to work
• Temporary disability payments if an injury prevents them from doing their usual job while recovering
• Permanent disability benefits for long-term or career-ending injuries
• Life pension payments for qualifying permanent disabilities
• Supplemental job displacement vouchers to cover retraining costs
• Death benefits for an employee’s family if a work-related injury or illness is fatal
Workers’ comp also protects you as an employer. In exchange for providing coverage, California generally prevents employees from suing you directly for workplace injuries.
How Does Workers’ Compensation Work in California?
When an employee is injured or becomes ill due to work, California’s workers’ compensation system kicks in as a no-fault insurance program. That means benefits are paid regardless of who caused the injury.
Benefits are calculated based on the employee’s average weekly wage (AWW). For 2026, California has updated its temporary disability rates:
• Maximum Temporary Total Disability (TTD): $1,764.11 per week
• Minimum Temporary Total Disability (TTD): $264.61 per week
TTD payments equal two-thirds of the employee’s average weekly wage, subject to these state minimums and maximums. Benefit rates are reviewed and adjusted each January 1st based on California’s State Average Weekly Wage (SAWW).
Is Workers’ Compensation Mandatory in California?
Yes — under California Labor Code Section 3700, every employer with at least one employee must carry workers’ compensation insurance. This includes part-time workers, seasonal employees, and workers hired on an at-will basis. Even out-of-state employers must obtain coverage if their employees regularly work in California.
Who is generally exempt:
• Sole proprietors with no employees (though coverage is recommended)
• Executive officers and directors who fully own the corporation
• LLC members who do not actively work in the business
• Independent contractors (though misclassification is common — California’s ABC Test determines true status)
Who is NOT exempt:
• Any business with even one employee — full-time or part-time
• Roofing contractors, even with no employees
• Any business whose license is qualified by a Responsible Managing Employee (RME)
Penalties for non-compliance are severe. Operating without required workers’ compensation coverage is a criminal misdemeanor under California law and can result in:
• A minimum $10,000 fine
• Up to one year in county jail
• State civil penalties of up to $100,000
• A stop-work order issued by the California Division of Labor Standards Enforcement (DLSE)
• Unlimited personal liability for all employee injury costs
Is Workers’ Compensation Mandatory in California?
Yes — under California Labor Code Section 3700, every employer with at least one employee must carry workers’ compensation insurance. This includes part-time workers, seasonal employees, and workers hired on an at-will basis. Even out-of-state employers must obtain coverage if their employees regularly work in California.
Who is generally exempt:
• Sole proprietors with no employees (though coverage is recommended)
• Executive officers and directors who fully own the corporation
• LLC members who do not actively work in the business
• Independent contractors (though misclassification is common — California’s ABC Test determines true status)
Penalties for non-compliance are severe. Operating without required workers’ compensation coverage is a criminal misdemeanor and can result in:
• A minimum $10,000 fine
• Up to one year in county jail
• State civil penalties of up to $100,000
• A stop-work order shutting down your business
• Unlimited personal liability for all employee injury costs
California Workers’ Compensation Law for Employers
California employers have three core legal obligations under the workers’ compensation system:
1. Purchase coverage — Obtain a workers’ comp policy from a licensed private insurer, through the State Compensation Insurance Fund (State Fund), or qualify for self-insurance through the Office of Self Insurance Plans (OSIP).
2. Post required notices — Display the “Notice to Employees” poster in a visible location at every worksite. Failure to post is a misdemeanor and can result in a civil penalty of up to $7,000 per violation. As of 2025, updated posting requirements also require you to inform employees that they have the right to consult a licensed attorney at no upfront cost (AB 1870).
3. Provide new hire information — Give every new employee a workers’ compensation pamphlet explaining their rights and responsibilities on their first day.
Important: California law prohibits employers from passing the cost of workers’ compensation insurance on to employees. You cannot deduct premiums from wages or require employees to contribute to coverage costs. In return, employees generally waive their right to sue you for workplace injuries.
California Workers’ Comp Settlement Types
Not all workers’ compensation claims are disputed, but when they are, California offers two primary settlement options:
Stipulated Findings and Award
The employee and employer agree on the extent of the injury and the resulting disability rating. The employer (or their insurer) continues to pay for ongoing medical treatment related to the permanent disability. This is ideal when the employee will need long-term medical care.
Compromise and Release (C&R)
The injured worker accepts a one-time lump sum payment that fully resolves the claim. In exchange, the employer has no further obligation for medical treatment or benefits. This option works best when the worker prefers financial certainty over ongoing benefits.
Both settlement types must be approved by a Workers’ Compensation Appeals Board (WCAB) judge to ensure the agreement is fair and in the employee’s best interest.
California Workers’ Comp Settlement Types
Not all workers’ compensation claims are disputed, but when they are, California offers two primary settlement options:
Stipulated Findings and Award
The employee and employer agree on the extent of the injury and disability rating. The employer continues paying for ongoing medical treatment. Best for cases requiring long-term care.
Compromise and Release (C&R)
The injured worker accepts a one-time lump sum to fully resolve the claim. No further medical or benefit obligations for the employer. Best when the worker prefers financial certainty.
Both settlements must be approved by a Workers’ Compensation Appeals Board (WCAB) judge.
How to File a Workers’ Compensation Claim in California
When an employee reports a work-related injury or illness, California law sets strict timelines you must follow:
Within 1 business day of receiving notice of injury:
• Provide the employee with a DWC-1 workers’ compensation claim form
• Authorize up to $10,000 in appropriate medical treatment immediately
• Forward the completed claim form and injury report to your insurer or claims administrator
Within 1 business day after the employee submits the form:
• Provide the employee a completed copy of the claim form
• Report the injury to your workers’ compensation carrier
Additional obligations:
• Report any serious injury, death, or hospitalization to Cal/OSHA within 8 hours
• Employees have up to one year from the date of injury to file a claim
• Depending on the injury, you may need to authorize modified or light-duty work during recovery
Failing to meet these deadlines can expose your business to additional penalties and increase your liability on the claim.
Get a Workers’ Compensation Quote from Wellington Partners
Navigating California’s workers’ compensation requirements can be complex — but you don’t have to do it alone. Wellington Partners Insurance Services specializes in helping California businesses find the right workers’ comp coverage at competitive rates.
Whether you’re a contractor, a small business owner, or managing a large workforce, we’ll help you:
• Get compliant with California Labor Code Section 3700
• Compare rates from multiple licensed carriers
• Understand your industry’s specific class codes and risk factors
• Stay current with California’s annual benefit rate changes
Call us today at (818) 492-4355 or fill out our online quote form to get started.
Get a Workers’ Compensation Quote from Wellington Partners
Wellington Partners Insurance Services specializes in helping California businesses find the right workers’ comp coverage at competitive rates. We’ll help you get compliant, compare carriers, and stay current with California’s annual benefit rate changes.
Call us today at (818) 492-4355 or fill out our online quote form to get started.
Call us for a quote