How it helps an injured employee
A worker who falls from a ladder or develops a work-related injury may need treatment and time away from the job. California workers’ compensation provides benefits such as medical care and partial wage replacement when the legal requirements for those benefits are met. The employee generally does not have to prove the employer was negligent.
This is different from general liability, which generally addresses claims by customers and other third parties. Employers liability is a separate part of a workers’ compensation policy that can respond to certain employee-injury lawsuits; it is not the same as the statutory benefits.
Which California businesses must carry it
California employers generally must provide workers’ compensation even if they have only one employee. Part-time or temporary work still needs consideration. Calling a worker an independent contractor or paying them on a 1099 does not by itself settle their legal status.
CSLB also lists active C-8, C-20, C-22, C-39 and C-61/D-49 licensees as requiring coverage or valid self-insurance even without employees. Other eligible no-employee licensees may qualify for an exemption. Check the current CSLB rule for your exact license, including any responsible managing employee. Owner inclusion or exclusion is a separate question from whether the business must carry a policy.
Why we ask what each person does
A payroll classification, often called a class code, groups work for insurance rating. Installing roofs and doing qualifying office-only work involve different risks. Your contractor license classification identifies work you are licensed to perform; it is not the same system as an insurance class code.
Describe actual duties before trying to choose a code yourself. When an employee performs more than one kind of work, rules govern whether payroll can be divided. Separate time records may be required. Recording duties as the work happens is more useful than trying to reconstruct them at year-end.
Payroll estimates become actual payroll at audit
The policy commonly begins with your estimate for the coming year. A premium audit is the insurer’s later review of payroll and other records to calculate the final charge. More payroll can create an additional premium; less may produce a credit, subject to minimum charges and other policy terms.
What claims history and an experience modification mean
Loss runs are reports from previous insurers listing claims, payments and amounts reserved for claims still open. An experience modification, or X-mod, is a rating factor for eligible businesses that compares their loss experience with what is expected for similar businesses. It is not simply a count of accidents.
For a renewal comparison, send the current policy, realistic payroll estimates, recent loss runs and any X-mod information you have. If you are a new business, explain your experience and planned crew. We can review State Fund and other available options using the same information, then explain cost and owner treatment before you decide.
Common questions
An owner exclusion generally means that owner does not receive benefits under the policy for their own injury. Tell us whether protecting your own work injuries is one of your goals so available owner coverage can be reviewed before an election is made.
Arrange the required employee coverage before work starts and address the CSLB filing. A no-employee exemption cannot be relied on once the business has employees who require coverage. Tell us about the person’s duties, start date and expected payroll.