Workers’ Compensation in California: What Business Owners Need to Know
Origin and Purpose of Workers’ Comp in California
Workers’ compensation is an insurance policy whose law was enacted in 1913 and has existed in California since the 1920s. This policy gives employees quick access to medical treatment for on-the-job injuries and illnesses. It also protects the business against lawsuits brought by injured workers. The insurance company pays monetary compensation to cover treatment costs for an injured worker and legal bills for liability claims against the business.
Who Needs to Carry Workers’ Compensation in California?
The state of California mandates all employers to have this policy regardless of the size of the business. Even companies with one employee are not exempted from purchasing this coverage. Out-of-state employers with one or more workers operating within the state must also purchase workers’ compensation in CA.
If I Have Workers’ Comp Coverage, Can I Still Be Sued?
This structure typically eliminates the need for lawsuits because of the benefits provided for most work-related injuries. However, there are certain exemptions provided under the Labour Code. An employee can sue the business if the employer engages in any discriminatory practices against them based on race, gender, or religion. A business can also be sued if an employee suffers an injury due to willful misconduct on the part of the employer.
Either of these suits can damage the business’s reputation, so it is best to hire a reputable defense attorney who can help protect the company’s legal and financial interests.
Who Is Required to Pay the Premiums?
Like all insurance coverages, the policyholder, which is the employer, is expected to pay the premiums. This coverage cost will be included in the company’s overhead expenses. Employers cannot ask employees to make full or part-payments to cover the cost of this policy.
Do Sole Proprietors Need Workers’ Compensation?
Generally, all business owners are mandated to purchase this coverage, but like most laws, there is an exception. Sole proprietors with no employees are not required to purchase workers’ comp. It may become necessary to buy coverage once there are one or more employees, even if the employment is temporary. This is because temporary workers are also at risk, so the company must ensure that they are well-protected while on the job.
What Is Self-insurance?
Many enterprises in California opt for self-insurance as a means to fulfill their workers’ comp obligation. This type of coverage must provide equal protection as the standard workers’ comp policy. A self-insured business is solely responsible for any claim brought against them.
The Downside of Not Having a Workers’ Comp Policy
The importance of purchasing workers’ comp coverage for your enterprise cannot be overemphasized. Not having adequate insurance to lessen the financial responsibility in the event of a mishap can lead to out-of-pocket costs that can take your business off the market. If you are found running a business without the mandated coverage, it can cost you significantly more than the price of purchasing one. Failure to carry workers’ comp in California is treated as a criminal offense. The penalties include a fine of not less than $10,000 or imprisonment in the county jail for a year, or both.
This is what you need to know about workers’ comp coverage in California. Looking for reliable commercial coverage? Let the professionals take care of your insurance needs. At Little & Sons Insurance Services, our team of experts has been providing California residents with customized insurance services since 1922. Contact us today for reliable business insurance.