California Workers Compensation Insurance
California Workers' Compensation Insurance
In California, workers' compensation insurance is a legal requirement for businesses. Any business that has even just one employee must have workers compensation insurance.
A few exceptions to this rule are:
1. Coverage is optional for sole owners without any employees. Sole owners can choose to opt out, however it is important to discuss the decision with licensed agent or broker. Officers and directors are considered employees, so they are covered by workers compensation insurance. Regardless of ownership, all roofers MUST have workers compensation insurance, even if they are sole proprietors and have no employees.
2. The only other way to not have workers compensation insurance is if you choose to self insure. If youd like to self insure, you will need to put aside a security deposit and your business needs to have net worth of at least $5 million and a net income of $500,000 per year. Any business that wants to self insure must receive approval from the state of California.
The penalties for not having workers compensation insurance in California are steep. The state is serious about workers comp and those who are required to have it but do not can receive large fines or even jail time. It is a misdemeanor to not comply with these laws and fines range from $10,000 to $100,000. Jail time for these offenses can be from 60 days to one year in jail. Additionally, failing to comply with posting requirements can get you fines of up to $7,000 per violation.
In order to comply with the law and avoid these fines, once you get your workers compensation insurance, you will receive a certificate and a Notice to Employees. You are required by law to put the posting notice in a highly visible place. The notice provides information so employees know how to handle workplace injuries.
In order to avoid fines, ask your insurance broker what specifically you need to do to be in compliance. Since laws change frequently, ask them each year at renewal if anything has changed and what you need to do. If you can not find the posting notice, call your broker and have them explain everything to you. It is also important to know that if you have more than one business location, you must post a notice and certificate in each location.
This year workers comp rates in California are increasing. Many people want to know how much it costs, however the rate that you pay for your premium is determined by a number of factors, so there is no quick or easy answer to this question.
What you pay will be determined by your insurance history, the number of workers comp claims you have had, the severity of those claims, the job classifications of your employees, your payroll, and if you have received any citations for non-compliance.
Those are the major factors that influence your experience modification factor. This is a complex formula that uses the base rate and then gives you a credit or an additional amount you pay on your premium. The average experience modification is around 1, also indicated at 100. There are two ways to look at the number, but it is usually displayed in three digits. Someone with a good history with no claims will be below 100. Someone else who has had a history of injuries will be above 100. The lowest I have seen is around 60, and the highest, over 200.
In sum, California workers compensation insurance is highly regulated and fairly complicated. You should contact an experienced broker who can help you understand what your rates are and how you can reduce your costs associated with workers compensation insurance.
Implementing safety programs or a claims management program are two good ways to decrease the amount of your workers compensation premium. Invensure Insurance Brokers has been helping businesses with their workers' compensation insurance for over 35 years and has a program to successfully reduce the costs associated with a high experience modification factor. If you have any questions, please call 800 331-4700.
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