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Is Workers' Comp Required in California

California Workers Compensation Requirements

    California requires all employers to buy workers' comp in the state regardless of the number of employees they have.

    Sole-Proprietors are not automatically included for coverage under a workers comp policy. They can elect to be included. Owners must elect to be included on the Acord 130 application in order to be valid.

    Partners are automatically included for coverage. They can't elect to be exempt from coverage.

    Corporate Officers who are the sole shareholder are excluded from coverage, but they may elect coverage. Officers of other corporations are automatically included for coverage and can't be excluded or exempt. Certain Officers who own more than 15% of the business can opt out of coverage if they meet certain requirements.

    All LLC Members who work in the business are included under coverage in California. However, non-working LLC Members are excluded from coverage unless the elect to be covered on the Acord and listed on the policy.

    The California State Insurance Fund is managed by SCIF- California State Compensation Insurance Fund.

Workers' Comp Exemptions in California

    California can be a very confusing state when it comes to properly documenting the inclusion and exclusion of business owners. Insurance carriers utilize their own forms to properly document how owners are treated under the policy. Incorrect documentation can lead to audit issues if this process is not managed carefully.

    Sole-Proprietors who include themselves on workers compensation coverage must use a minimum payroll amount of $54,600 and a maximum of $139,100 for rating their overall workers' compensation cost.

    Partners, Officers and LLC Members who are not excluded from coverage must also utilize a minimum payroll of $54,600 and a maximum of $139,100 in order to calculate the cost of workers comp insurance.

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How is Workers Comp Calculated?

Workers' compensation is a commercial insurance product categorized as Property & Casualty insurance (P&C Insurance). Even though workers comp is calculated using estimated payroll wages and class codes, premium is still a separate business expense from the cost of payroll. Business owners may treat the cost of coverage as an expense on their taxes.

Work comp rates for all job classification codes are always expressed as a percentage of $100 in wages. An annual policy is always subject to an audit because it was based on estimated wages and not actual wages.

Here is an example using two class codes with different estimated payroll for each class code:

Class Code Insurance Companies Rate Per $100 Estimated Annual Payroll Divide Payroll by 100
8810 Clerical $0.28 base manual rate $25,000  (25000 divided by 100) 250
8835 Home Health Care $1.75 base manual rate $100,000  (100000 divided by 100) 1000

In order to calculate the cost of the policy you only need to multiply each rate with its divided payroll. It benefits employers to re-calculate their premium as their payroll becomes larger than originally anticipated.

Class Code Workers Comp Calculator Estimated Premium
8810 Clerical $0.28 X 250 $70.00
8835 Home Health Care $1.75 X 1000 $1,750.00
Workers' Compensation Laws Vary by State

Every state has their own rules for how employees must be covered and how they must be classified for rating premium. A lot of states use state specific class codes and have different requirements for who is obligated to carry workers' compensation insurance coverage.

If you have employees that travel out of state for work, or they work in multiple states throughout the year, you may need to purchase insurance for all the states where your workers are located and working. In most cases, you can add multiple states to one policy.

Workers' Compensation Insurance in California can be purchased from private insurance companies authorized by the state to provide coverage. The Assigned Risk Pool, or State Insurance Fund, is available for employers who are unable to find coverage from a private company. can help you navigate your best options.

Policy premium is based on numerous factors including: class codes assigned to your business and employees, estimated payroll, covered states, prior policies, owner experience and previous insurance claims.

Enjoy the benefits of our Pay As You Go Workers' Comp Options in California.

$O Deposit or Minimum Down

We've developed Pay As You Go workers compensation programs that reduce or eliminate premium deposits and allow California employers to report and pay premium based on actual payroll wages. Protect your business from audits today.

More Payments Options

We've negotiated special terms with many of our insurance partners to offer more flexible payment plans like 12 equal installments plans and monthly reporting programs to help improve cash flow for our business owners.

Easier to Qualify for Coverage

We offer workers compensation quotes from over 35 insurance carriers writing insurance in CA, making us your best option for lower workers compensation rates, and good quotes for tougher workers comp class codes in California.

California Workers Compensation Insurance Quotes

CA Workers' Comp Specialists

At Workers Compensation Shop, we're a little old fashioned. We still believe insurance is a relationship business. Sure, our technology is amazing, but trust is even more important to us. We consult and arm our customers with work comp knowledge. Then we advocate on your behalf to shop coverage for you.

Help with CA Class Codes

California does not utilize NCCI for managing and developing workers comp rates. Instead, California utilizes its own system and rating bureau: Workers Compensation Rating Bureau of California. Our licensed Specialists can help employers navigate and understand California classification codes and more.

Fast Workers' Comp Quotes

We make the process of getting workers comp quotes fast and easy. We know your time is valuable. That's why we work hard to streamline the quote process, compare your rates, and present your best options as quickly as possible. Get workers' compensation quote options back in 24 hours or less.

Compare Rates With More Carriers

Why go it alone? We're a National Agency, and we have tons of carriers offering work comp in California. We have access to over 35 insurance companies with a diverse appetite and competitive rates. Our markets know we expect the lowest rates, bigger discounts, and more policy credits when we request a quote.

Don't Wait for Your California Rates to Increase

Did you know that the cost of a workers comp policy in California can vary significantly between insurance company, underwriter, and insurance agency?
Find the best deal on workers compensation insurance.
Visit NCCI for more resources and information about workers' compensation class codes. Visit United States Department of Labor for more information about government agencies managing workers compensation insurance rates.

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