California law requires almost every employer to carry Workers Compensation insurance from the moment they hire their first employee. Failure to maintain coverage can result in criminal prosecution, significant fines, and personal liability for all employee injury claims.
What Workers Comp Covers
Workers Compensation provides benefits to employees who suffer work-related injuries or illnesses:
Medical Benefits: Covers reasonable and necessary medical treatment for work-related injuries or illnesses.
Temporary Disability (TD): Pays a portion of the employee's lost wages while they are unable to work during recovery — typically two-thirds of their average weekly wage.
Permanent Disability (PD): Compensates employees for lasting impairments resulting from a work-related injury or illness.
Supplemental Job Displacement Benefits: Vouchers for retraining or skill enhancement if the employee cannot return to their prior job.
Death Benefits: Provides benefits to surviving dependents in the event of a fatal work-related injury.
Employer's Liability Coverage
Most Workers Comp policies also include Employer's Liability — which protects the employer against lawsuits from injured employees who allege employer negligence beyond the scope of standard workers comp claims.
How Premiums Are Calculated
Workers Comp premiums are based on:
- Payroll: The higher your payroll, the higher the premium base
- Class Code: Your industry and the type of work your employees perform
- Experience Modification Factor (EMR): A multiplier based on your claims history compared to other businesses in your industry
A good safety program and low claims history can significantly reduce your EMR over time, resulting in meaningful premium savings.
Independent Contractors and Misclassification Risk
California has strict rules on worker classification (AB5). Misclassifying employees as independent contractors can expose a business to back payments, penalties, and uninsured workers comp liability. When in doubt, consult legal counsel and review your contractor agreements.
Work With Capital & Co
Capital & Co can help you evaluate Workers Comp options, identify the right class codes for your operations, and structure a program that keeps your business compliant and competitive.
Questions About Your Coverage?
Speak with Capital & Co about a strategy built for your business.
