Workers’ Compensation Insurance in California

What are the laws that govern workers’ compensation insurance in California?

According to the California state website:

California law requires that employers, including those in the construction industry, carry workers’ compensation insurance, even if they have only one employee. The insurance exists for employees who get hurt or sick because of work. Workers’ compensation insurance provides basic benefits, including medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits and a return-to-work supplement, and death benefits.

Workers’ compensation is the nation’s oldest social insurance program: It was adopted in most states, including California, during the second decade of the 20th century. The workers’ compensation system is based on a trade-off between employers and employees. Employees are entitled to receive prompt, effective medical treatment for on-the-job injuries or illnesses no matter who is at fault and, in return, are prevented from suing employers over those injuries.

As a result, California employers are required by law to have workers’ compensation insurance, even if they have only one employee. And, if your employees get hurt or sick because of work, you are required to pay for workers’ compensation benefits. Workers’ comp insurance provides basic benefits, including medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits and a return-to-work supplement, and death benefits.

The vast majority of workers’ compensation claims are resolved without any problems. However, sometimes a disagreement can arise between you and your employee over issues such as whether the injury was sustained on the job or how much in benefits they are entitled to receive.

When a dispute like that arises, the Division of Workers’ Compensation can help resolve it through its Information and Assistance Unit or by going before a judge at one of the division’s 22 local district offices plus satellites.

Who is required to purchase workers’ comp insurance in California?

According to the California state website:

All California employers must provide workers’ compensation benefits to their employees under California Labor Code Section 3700. If a business employs one or more employees, then it must satisfy the requirement of the law.

Sometimes a business owner (sole proprietor) may desire to purchase workers’ compensation insurance to cover himself/herself only. The inclusion of a sole proprietor must be clearly stated in the workers’ compensation policy or must be added as a coverage endorsement to the policy. Since workers’ compensation insurance is a type of liability insurance where the employer assumes complete liability for all worker injuries, a workers’ compensation policy for a sole proprietor may not be the best choice.

Purchasing health, life, and/or disability income insurance can be a viable option to workers’ compensation for a sole proprietor. Contact a licensed commercial broker-agent or a casualty broker-agent for further information and consultation.

Executive officers and directors of corporations must be included in workers’ compensation coverage, unless the corporation is fully owned by the directors and officers. If the directors and officers fully own the corporation, then they may elect to be excluded from workers’ compensation benefits. Fully owned corporations may want to discuss the option to include or exclude their officers and directors with a licensed commercial broker-agent.

California Labor Code Section 3351 defines who is an employee, and therefore who can be covered under a workers’ compensation policy. Whether a business is a sole proprietorship, a partnership, or a corporation, it is beneficial to develop a working relationship with a reliable, competent broker-agent who can explain coverage eligibility issues and present options based on the organization model of a business.

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