California · state requirements

Workers’ comp insurance in California

For California employers and licensed contractors: who must carry coverage, what happens without it, the CSLB rules for HVAC, roofing and other trades and what coverage costs in 2026.

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What similar businesses pay

California small-business average: About $63 a month
Average charged rate: $1.64 per $100 of payroll
Advisory pure premium rate: $1.65 per $100 of payroll

Published benchmarks, not quotes. Your price depends on underwriting.

Cost

What workers’ comp insurance in California costs

About $63 a month

California small-business average

Insureon customer average for California, updated June 5, 2026

$1.64 per $100 of payroll

Average charged rate

WCIRB, first half of 2026, as reported by Business Insurance, October 2026

$1.65 per $100 of payroll

Advisory pure premium rate

California Insurance Commissioner decision, effective September 1, 2026

$1.86 per $100 of payroll

California index rate

Oregon DCBS 2024 premium rate ranking, 4th highest of 51

California is one of the most expensive states for workers’ comp. Oregon’s 2024 ranking, which compares states on the same mix of 50 job classes, put California 4th highest at 170% of the study median. The Workers’ Compensation Insurance Rating Bureau reported average charged rates of $1.64 per $100 of payroll in the first half of 2026, up from $1.63 in 2025, and the Insurance Commissioner adopted an average advisory pure premium rate of $1.65 for September 1, 2026, 6.6% above the 2025 rate. As an illustration only, $200,000 of payroll at the average charged rate works out to about $3,280 a year before any modifier. Insureon reports that its small California customers, most with fewer than five employees, pay about $63 a month, or $756 a year.

What moves your price

Your classification: California rates employers under the Workers’ Compensation Insurance Rating Bureau’s class system rather than NCCI’s, according to Insureon.
Payroll in each class, charged per $100 of payroll and checked at the annual audit.
Your experience modification, which compares your claims history with similar employers.
Each insurer’s own rates: the commissioner’s pure premium rates are advisory, and insurers are free to set their own.
Medical treatment, medical-legal and claim adjustment costs, which the commissioner cited as drivers of the 2026 increase.
Whether owners are covered: corporate officers, general partners and LLC managing members can elect to be excluded under Labor Code 3351.

California

What’s different in California

Coverage starts with your first employee

Labor Code 3700 requires every employer except the state to insure or self-insure, and the Division of Workers’ Compensation says that applies even with one employee. Under Labor Code 3357, anyone performing services for you is presumed to be an employee unless they are an independent contractor or expressly excluded.

Going uninsured is a crime

Under Labor Code 3700.5, knowingly failing to secure coverage is a misdemeanor punishable by up to one year in county jail, a fine of up to double the unpaid premium but not less than $10,000, or both. A second conviction carries a minimum fine of $50,000.

Stop orders and per-employee penalties

Labor Code 3710.1 lets the state serve a stop order barring the use of employee labor until you are insured, and you must pay affected workers for up to 10 days of lost time. Labor Code 3722 adds $1,500 per employee, or twice the unpaid premium if that is greater and you were uninsured for more than a week.

Uninsured employers face lawsuits with no defenses

An injured worker of an uninsured employer can sue for damages under Labor Code 3706. Labor Code 3708 presumes the injury resulted from the employer’s negligence and bars defenses that the worker was negligent, assumed the risk or was hurt by a co-worker.

Contractor licenses depend on it

The Contractors State License Board requires a certificate of workers’ comp or a no-employee exemption on every active license. C-8 concrete, C-20 HVAC, C-22 asbestos, C-39 roofing and D-49 tree service licensees must carry coverage even with no employees, and a lapse suspends the license.

Out-of-state employers can be caught

The Division of Workers’ Compensation says an out-of-state employer may need California coverage if it has employees regularly working in California or enters into a contract of employment here.

Coverage

Coverage California businesses need

Workers’ compensation

Provides the benefits California law requires: medical care, temporary and permanent disability benefits, supplemental job displacement benefits, a return-to-work supplement and death benefits, according to the Division of Workers’ Compensation.

How workers’ compensation works →

Employer’s liability

Insureon notes that policies usually include employer’s liability insurance, which helps with legal costs when an employee blames you for an injury.

How workers’ compensation works →

State Compensation Insurance Fund

California has a competitive state fund that, according to Insureon, writes coverage for businesses of all sizes and types alongside private insurers.

How workers’ compensation works →

Pay-as-you-go billing

Insureon says some small employers can pay premium based on actual payroll each period instead of an upfront estimate, which suits seasonal or fast-growing crews.

How workers’ compensation works →

Self-insurance

Labor Code 3700 allows employers to self-insure with a certificate of consent from the Director of Industrial Relations. Insureon notes it requires at least three years in business and suits larger companies with the money to pay claims.

General liability

Covers injuries and property damage you cause to customers and the public. It does not cover injuries to your own employees, so contractors usually need both policies.

How general liability works →

Rules

California requirements

California requires workers’ comp of nearly every employer and ties it to contractor licensing. These are the main rules; check the Department of Industrial Relations or the Contractors State License Board for your situation.

Requirement	Applies to	What it means
Secure workers’ comp	Every employer except the state, from the first employee	Insure with an authorized insurer or obtain a certificate of consent to self-insure (Labor Code 3700; DIR).
Employee presumption	Anyone performing services for you	Presumed to be an employee unless an independent contractor or expressly excluded (Labor Code 3357 and 3351(i)).
Owner exclusions	Corporate officers and directors, general partners, LLC managing members	May elect to be excluded from coverage under Labor Code 3351(c) and (f) and 3352.
Time-of-hire notice	All employers	Give each new employee the written workers’ comp notice at hire or by the end of the first pay period (8 CCR 9880).
Notice to Employees poster	All employers	Post it in a conspicuous place employees use, naming your insurer, in English and Spanish where there are Spanish-speaking employees (8 CCR 9881).
CSLB certificate or exemption	Licensed contractors	Keep a workers’ comp certificate on file, listing your top three class codes, or file a no-employee exemption (Business and Professions Code 7125 and 7125.6).
Mandatory trades	C-8, C-20, C-22, C-39 and D-49 licensees	Must carry workers’ comp or be self-insured whether or not they have employees; no exemption is accepted (BPC 7125; CSLB).
Hiring after an exemption	Exempt contractors who take on employees	The exemption stops being valid, and proof of coverage must reach CSLB within 90 days of the hire (CSLB).
Uninsured penalties	Employers without coverage	Stop order, $1,500 per employee or twice the unpaid premium and misdemeanor charges (Labor Code 3710.1, 3722 and 3700.5).

Compare workers’ compensation options in California.

One application, quotes from several insurers, reviewed by a licensed agent. Start with your email and finish later if you need to.

Pay less

How to lower the cost

Make sure each employee’s payroll is in the correct class; Insureon notes desk jobs and other low-risk roles cost less to insure.
Compare several insurers, including the State Compensation Insurance Fund, because advisory rates are not binding and each insurer sets its own price.
Decide deliberately on owner coverage: excluding eligible officers or members lowers premium but leaves them without benefits.
Use pay-as-you-go billing if payroll is seasonal or growing quickly, so you are not paying on a high estimate.
Keep coverage continuous; a lapse can bring a stop order, per-employee penalties and a suspended contractor license.
An independent broker that compares options from several insurers, such as Florin, can check your class codes and quote the same payroll across markets.

Before you start

What underwriters ask for

Your CSLB license number and classifications, if you are a contractor
A description of each role, or your current WCIRB class codes
Estimated annual payroll by class, plus last year’s actual payroll
Owners and officers you want included or excluded
Number of employees and any 1099 workers, with what they do
Five years of loss runs and your current experience modification
The states where you have employees working

Common questions

Workers’ comp insurance in California: questions

Do I need workers’ comp with one employee in California?

Yes. Labor Code 3700 applies to every employer except the state, and the Division of Workers’ Compensation says that includes businesses with only one employee. Insureon notes that part-time hours do not change the requirement.

Does a C-20 HVAC contractor with no employees need workers’ comp?

Yes. CSLB requires active C-8, C-20, C-22, C-39 and D-49 licensees to carry workers’ comp or a certification of self-insurance whether or not they have employees, and they cannot file the no-employee exemption.

Will all California contractors need workers’ comp in 2028?

That is the current schedule. The version of Business and Professions Code 7125 that allows a no-employee exemption is set to be repealed on January 1, 2028; WCIRB’s 2024 legislative summary reports that SB 1455 moved the broader SB 216 deadline from 2026 to January 2028, and Insureon says all licensed contractors will need coverage from 2028.

What happens if I am caught without coverage in California?

The state can serve a stop order barring the use of employee labor, assess $1,500 per employee or twice the unpaid premium and refer a misdemeanor charge with a fine of at least $10,000. An injured worker can also sue you, and the law presumes you were negligent.

Can I exclude myself from workers’ comp as an owner?

Often, yes. Labor Code 3351 lets corporate officers and directors, general partners and LLC managing members elect to be excluded, subject to the conditions in Labor Code 3352. Contractors in the mandatory CSLB trades still need a policy.

Who sets workers’ comp rates in California?

The Workers’ Compensation Insurance Rating Bureau proposes advisory pure premium rates and the Insurance Commissioner adopts them. For September 1, 2026 the commissioner adopted $1.65 per $100 of payroll, below the bureau’s requested 10.4% increase, and insurers remain free to set their own rates.

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Sources (17)

Figures are published third-party estimates, not quotes. Coverage depends on policy terms and underwriting, and rules vary by state. Updated October 2026.