California Workers' Compensation Insurance

Workers Comp 
California Workers' Compensation Insurance

The State of California requires all businesses with employees to purchase workers' comp. This pays for the cost of work-related injuries, including medical care, disability benefits, and lost wages. 

Hourly makes it easy to get set up with California workers' comp and keep cash flowing through convenient, pay-as-you-go pricing.

Is Workers' Comp Required in California?

According to the California Labor Code, all California employers must purchase coverage or be self-insured. 

This is true even if your business's headquarters are in another state. 

As long as you have at least one part-time or full-time employee who regularly works in California, you are required to carry this type of insurance. 

In fact, California law requires employers to do three things:

  1. Carry workers' comp coverage for your employees
  2. Make sure new hires are informed about their coverage
  3. Post the "Notice to Employees" in your workplace

What Does Workers' Comp Cover in California?

For California businesses, workers' comp covers a range of injuries, illnesses, and other conditions sustained at an employee's job. These include:

  • Back and neck injuries (from lifting, falling, etc.)
  • Breaks, sprains, and fractures
  • Exposure to harmful chemicals 
  • Cuts, tears, burns, and other physical injuries
  • Allergic reactions
  • Cumulative trauma, or repetitive motions that lead to conditions like carpal tunnel

According to California law, employees are eligible for the following workers’ compensation benefits in case of a work-related injury:

Medical Expenses

Workers' comp includes free medical treatment for injured workers. It covers clinical visits, medication, hospital bills, surgeries, and any other necessary medical care from a medical provider.

Temporary Disability Benefits

If a work-related injury temporarily prevents an employee from doing their original job, workers' comp offers temporary disability (TD) benefits to cover their lost wages.

TD payments continue until the treating doctor considers the employee healthy or they return to their original or modified job at their original wages. 

However, the longest an injured employee can receive workers’ comp TD payments is for 104 weeks (or 240 weeks in case of severe injuries, including amputations, chemical burns to the eyes, severe burns, etc.) within five years of the date of injury. 

If they don’t recover in that duration, they may be eligible for permanent disability benefits. 

Permanent Disability Benefits

If a work-related injury leaves an employee impaired or disabled for the long term, then they're eligible for permanent disability payments. Typically, the amount depends on a disability rating, which estimates how much a particular injury limits the employee from earning a living. 

Supplemental Job Displacement Benefits

If an injury prevents an employee from returning to their original job, then they'll get supplemental job displacement benefits to pay for education or skill enhancement with a state-approved training provider.  

Death Benefits

Lastly, if an employee dies in a job-related accident, comp insurance covers funeral expenses and some financial support for their dependents. 

In addition to covering medical treatment and care such as prescriptions, equipment, or physical therapy, the insurance provider may pay an employee money for lost wages, disability, or an inability to return to their old job. 

If a work accident results in death, then death benefits may also be paid to the employee's dependents.

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FAQs About California Workers' Comp 

How does workers' compensation insurance work in California?

Workers' comp covers the cost of work-related injuries and illnesses, including things like medical treatment, disability benefits, retraining, and death benefits. 

California's Division of Workers' Compensation (DWC) oversees claims and supports employers and employees throughout the process.

When an employer learns of a work-related injury or illness, they must give a claim form to the employee within one business day. The employee then submits the form to the employer, who has one business day to:

  • Send the claim form to their insurance company or claims administrator.
  • Give a copy of the completed form to the employee.
  • Authorize the employee to receive up to $10,000 in medical care

The employer can get help with this process from their insurance agent, who acts as a liaison between the employer and the insurance provider.

Employers usually have a Medical Provider Network (MPN), or a list of preferred physicians and healthcare specialists. 

In order to receive compensation for medical care, an injured employee must choose a provider from this list.

How do you purchase workers' comp in California?

Business owners have four options for purchasing this type of insurance in California:

  • Work with an insurance agent to get quotes from insurance providers.
  • Purchase from a private insurance company.
  • Purchase from the state fund.
  • Self-insure your company: If you meet certain requirements, including having been in business for at least three years, you may be able to apply for approval from the Office of Self-Insurance Plans (OSIP).

How can California business owners save money on workers' comp?

To save money, California business owners may choose to use pay-as-you-go coverage, which calculates payments in real-time based on your actual payroll, not your estimated payroll. 

Hourly's pay-as-you-go comp saves you money by cutting out premiums and lump sum payments. 

Plus, because our coverage is calculated based on actual payroll, we help reduce your audit fees at the end of the year.

How do workers' comp settlements work in California?

In California, there are two types of comp settlements:

Stipulated Findings and Award

In this settlement, the insurance provider agrees to pay the employee biweekly unless the employee needs the payment upfront. The provider also agrees to cover the cost of future medical care related to the illness or injury. If the employee's condition worsens within five years of the settlement date, they may be able to reopen the case.

Compromise and Release

In this settlement, the insurance provider pays a lump sum to close the case, which means they won't be responsible for covering future care, even if that care is related to the employee's illness or injury.

All settlements must be approved by a California judge, who often conducts an informal hearing. While the insurance provider, rather than the employer, handles all details of the case, it's a good idea for the employer to stay informed and up-to-date on the progress of the settlement.

How long does workers' comp have to pay you in California? 

For most employees, benefits last for up to two years from the date of injury. Under California law, if an employee sustains an on-the-job injury, they generally have one year from the date of injury to file a claim. 

If an injury is especially severe, benefits may last for up to four and a half years and may lead to temporary or permanent disability payments, which can last for the remainder of an employee's life.

Who is eligible for workers' comp insurance in California?

Workers' comp is required for both part-time and full-time employees who regularly work in California but not for independent contractors or sole proprietors in most cases. If you're self-employed, you may want to check with the California Department of Industrial Relations


Which workers' compensation benefits are required in California?

California requires businesses to include the following benefits in their comp coverage:

  • Medical treatment
  • Temporary disability benefits
  • Permanent disability benefits
  • Death benefits
  • Supplemental job displacement benefits, such as vouchers that can help pay for retraining costs if an injured worker returns to work but can no longer perform their original job and has to learn a new one

What are the California requirements for death benefits?

In the rare case that a workplace injury leads to death, death benefits may be paid to dependents of the deceased to cover burial expenses and lost wages. By California law, the insurance provider must cover:

  • Reasonable burial expenses up to $10,000
  • Death benefits (at the temporary disability rate) for any minor dependents, continuing until the youngest minor dependent turns 18

Death benefits are generally determined based on the number of the deceased's dependents, starting at $250,000 for one dependent.

What is the new workers' comp law in California?

Under a new California workers' compensation law taking effect in July 2023, certain contractors are required to provide coverage, regardless of whether or not they have employees. These include:

  • Concrete contractors with a C-8 license
  • HVAC contractors with a C-20 license
  • Asbestos abatement contractors with a C-22 license
  • Tree service contractors with a D-49 license

By January 2026, this law will apply to all contractors, except for those who have no employees AND are organized as a joint venture under Business and Professions Code Section 7029. 

You may be able to get around this law if you don't have any employees and if you file a statement with the Contractors State License Board saying that you don't employ anyone in a way that would make you subject to California comp laws.

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Get a Free California Workers' Comp Quote 

Looking for a way to get affordable coverage that protects your employees and complies with California state law? Hourly makes workers' comp faster, easier, and more cost-effective, helping small businesses break free of costly premiums and audit fees so they can truly thrive.

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