More Frequently Asked Questions on Workers Comp for Retailers

Does my business require California workers compensation insurance? If an employer has even one employee they are required by California law to have workers compensation insurance. Roofers may need workers compensation coverage even if they have no employees. Out-of-state employers also have to carry compensation insurance if an employee is employed in California on a regular basis or a contract of employment takes place in California. Am I required to obtain California workers compensation insurance if just my spouse and I are the sole owners of our business and have no employees? Consultation with your insurance agent, attorney, or carrier regarding your individual situation is recommended but insurance for sole owners is usually optional. However, workers compensation insurance is mandatory for any employees in the state of California, even if you have even one employee whether full-time or temporary.
Are a company's directors or executive officers covered under California workers compensation policy? Consultation with your insurance agent, attorney, or carrier regarding your individual situation is recommended. All employees of the company must be included in the policy (including corporate officers and directors) unless they are the sole owners of the company. Sole owners have the option of electing not to be covered. What affects my California workers compensation premium cost? The annual premium is determined by many factors. These include your industry classification, history of work-related injuries (experience modification), payroll, or special underwriting adjustments such as use of a certified health care organization, and any special group or dividend programs for which you may be eligible.

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What happens if I'm uninsured and an employee is injured?
Failing to have workers' compensation coverage is a criminal offense. Section 3700.5 of the California Labor Code makes it a misdemeanor punishable by either a fine of up to $10,000 or imprisonment in the county jail for up to one year, or both. 

Additionally, the state issues penalties of up to $100,000 against illegally uninsured employers.If an employee gets hurt or sick because of work and you are not insured, you are responsible for paying all bills related to the injury or illness.  You should be aware that workers’ compensation benefits are only the exclusive remedy for injuries suffered on the job when you are properly insured.

If you are illegally uninsured and an employee gets sick or hurt because of work, that employee can file a civil action against you in addition to filing a workers’ compensation claim.If you fail to pay required benefits you may also be contacted by the Uninsured Employers' Benefit Trust Fund.

Can I be fined for not carrying workers' compensation insurance?
Yes, you can be fined and more. If the Division of Labor Standards Enforcement (state labor commissioner) determines an employer is operating without workers' compensation coverage, a stop order will be issued. This order prohibits the use of employee labor until coverage is obtained, and failure to observe it is a misdemeanor punishable by imprisonment in the county jail for up to 60 days, or by a fine of up to $10,000, or both. The Division of Labor Standards Enforcement will also assess a penalty of $1,000 per employee on the payroll at the time the stop order is issued and served, up to $100,000 (Labor Code section 3722(a)).Additionally, if an injured worker files a workers' compensation claim that goes before the Workers’ Compensation Appeals Board and a judge finds the employer had not secured insurance as required by law, when the dispute is resolved the uninsured employer may be assessed a penalty of $10,000 per employee on the payroll at the time of injury if the worker's case was found to be compensable, or $2,000 per employee on the payroll at the time of injury if the worker's case was non-compensable, up to a maximum of $100,000 [Labor Code section 3722(b)].

Where can I report an employer for not carrying workers' compensation insurance?
You may report an uninsured employer at the nearest office of the Division of Labor Standards Enforcement. Click here to access information on local offices.


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