What You Need to Know About Exemptions from Workers’ Compensation in California
No employer is exempt from workers’ compensation in California if they have any employees. Here’s who is exempt from workers’ compensation in California.
California law requires all employers to have workers’ compensation insurance if they have at least one employee. This includes out-of-state contractors with employees working in California from another state.
Workers’ Compensation Laws in California
California Labor Code §3700 requires that every employer in the State of California have workers’ compensation insurance. Workers’ compensation insurance is a type of liability insurance where the employer assumes complete liability for all worker injuries.
Out-of-state contractors who are licensed in California, but who have employees working in California from another state must provide a certificate of insurance from their workers’ compensation insurance carrier in their state. They must also fill out an exemption form. The form can also be filled out online.
Employers are required to purchase workers’ compensation insurance from either a licensed insurance company or through the State Compensation Insurance Fund (State Fund). The State Fund is a state-operated entity that competes with private workers’ compensation insurance companies for business. It operates as a last-resort insurer if private companies are not willing to offer workers’ compensation insurance.
Failure to have workers’ compensation coverage is a criminal offense. California Labor Code §3700.5 deems such as a misdemeanor punishable by either a fine of at least $10,000 or jail for up to one year or both. Additionally, the state issues penalties of up to $100,000 against illegally uninsured employers.
If the state labor commissioner determines an employer is operating without workers’ compensation coverage, a stop order will be issued. The order prohibits the use of employee labor until coverage is obtained, and failure to observe it is a misdemeanor punishable by jail for up to 60 days, or by a fine of up to $10,000, or both. The commissioner will also assess a penalty double the amount the employer would have paid in workers’ compensation premiums during the period the employer was uninsured, or the sum of $1,500 per employee employed during the period the employer was uninsured.
California law also prohibits an employer from charging employees for the cost of workers’ compensation (§3751).
Related: California Workers’ Compensation Laws
Purpose of Workers’ Compensation
Workers’ compensation ensures that the cost of industrial injuries is a part of the cost of goods rather than a “burden on society.” It also guarantees quick and limited compensation for an employer’s work injury, regardless of fault, as a part of the cost of production. In addition, it protects the employer from being sued for liability.
Related: Workers’ Compensation: File and Prove a Claim
Employer’s responsibilities for workers
1. Before an injury or illness occurs, an employer must:
- Obtain workers’ compensation insurance or qualify to become self-insured.
- When hiring a new employee, provide a workers’ compensation pamphlet explaining the employee’s rights and responsibilities.
2. After an injury or illness occurs, an employer must:
- Provide a workers’ compensation claim form to the employee within one working day from the report regarding a work-related injury or illness
- Return a completed copy of the claim form to the employee within one working day of receipt
- Forward the claim form, along with the employer’s report of occupational injury or illness, to the claim’s administrator within one working day of receipt
- Within one day of receiving the claim, authorize up to $10,000 for appropriate medical treatment
- Provide transitional work (light duty) whenever appropriate
- If the employee is the victim of a crime that happened at work, the employer must give notice of workers’ compensation eligibility within one working day of the crime.
Exemptions from Workers’ Compensation
Only an owner, partner, officer, member, or manager can file for an exemption. In addition, one cannot file an exemption if:
- They employ anyone in a manner that is subject to California workers’ compensation laws (have any employees).
- Their license is qualified by a Responsible Managing Employee (RME), which is the title of an employee who serves as the qualifying individual on a sole owner, partnership, corporate, or limited liability company license.
- They hold a C-39 roofing classification.
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If you have any more questions about exemptions from workers’ compensation, contact us. We’ll get you in touch with the most qualified attorneys for your unique legal matter. Get your free consultation with one of our Work Injury Attorneys in California today!