Operating In California Without Workers Comp

If you have any employees, even just one, and you operate your business in California, here’s some advice worth listening to: make sure you have workers comp.

  • Even if it’s just one temporary employee?  Yes.
  • Even if it’s just one part-time employee?  Yes.
  • Even if it’s just one seasonal employee?  Yes.
  • Even if my employee is a family member?  Yes! (Unless you are sole-proprietor farmer farming your own land).
  • Even if my employee works in a different state?  Yes!
  • Even if my employee works from home?  Yes!
  • Even if I think of my employee an independent contractor and 1099 him at the end of the year?  It depends, but more often than not: YES!

These are questions I began hearing when I first started learning about workers comp in 2004, and I continue to hear them to this day.  The number of business owners that believe these myths is staggering  – and dangerous.

I’m not telling you this because I want you to give up, see the error in your ways, call me up, and buy some workers comp insurance.  In fact, there’s a good chance that I wouldn’t be able to help you if you’ve been operating without workers comp when there was a need for it.  This is not a sales pitch and I’m not trying to line my pockets.

Also, I’m not telling you this because I have any love or admiration for the law.  If you ask me, the workers comp system in California is highly dysfunctional, and in many ways unfair.  I have nothing but empathy for small businesses trying to stay afloat in California that may have given up paying some of their costs of doing business.

I’m telling you this because I want you to know that if you are in a state of needing workers comp but you don’t have it – whether you believe the myths above, have not found it in your budget to pay, or are simply unaware of the need – and an employee of yours gets injured, the consequences can be severe enough to cost you a lot of money, shut your business down, and even put you in jail.

What can happen?

Here are a few things:

  • You can get fined no less than $10,000 up to $100,000.
  • You can get time in the county jail for up to a year.  (This is a misdemeanor).
  • You are responsible for paying for your injured employee’s medical expenses out of your own pocket.
  • If the state of California steps in to pay your injured employee’s medical expenses, it will come after you for reimbursement of expenditures.
  • You will be prohibited from using employees until you secure workers comp coverage.  Violating this prohibition is a misdemeanor, and if you continue to use employee labor,  you can either be sent to the county jail for up to 60 days, or pay a fine of up to $10,000, or both.

The state of California is a very labor-friendly state with a low tolerance for uninsured business owners.  Check out its website that addresses everything I’ve addressed and more:

Play it safe – get covered!

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I’m the commercial producer and owner at Gillespie Insurance Services.



Posted on January 04, 2016 By Eli Gillespie

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Gillespie Insurance Services helps people and businesses in California, Arizona and Nevada.