Compliance
California Labor Code Section 3700 requires nearly every employer in the state to carry Workers' Compensation insurance or to qualify as a self-insured employer. The rule is statewide and applies regardless of where your business is headquartered — Los Angeles, Fresno, San Francisco, or a small town in the Sierra foothills.
The requirement applies to any employer with one or more employees, whether full-time, part-time, or seasonal. This includes family members working for a relative's business and undocumented workers — immigration status does not change the obligation. California courts have consistently enforced this broad interpretation.
Self-employed sole proprietors with no employees are generally exempt, and certain corporate officers or LLC members who own a qualifying percentage may elect to be excluded. But the moment you hire your first W-2 employee, the requirement activates.
Construction contractors face especially close scrutiny. The Contractors State License Board (CSLB) can suspend or revoke a license for lack of Workers' Comp coverage. Agricultural employers in the Central Valley, manufacturing operations in Southern California, and service businesses statewide all fall under the same Section 3700 rule.
Out-of-state employers with employees working in California — even temporarily — generally need California-compliant coverage. If you're unsure whether your situation triggers the requirement, speak with a licensed California agent before assuming you're exempt.
Purchase a Workers' Compensation policy from a licensed California carrier or a state-certified self-insurance plan. Keep proof of coverage accessible, post the required workplace notice (DWC notice of compensation carrier), and report new hires so your payroll classification stays accurate. A payroll audit at the end of the policy term reconciles estimated and actual payroll — be prepared with records.
For statewide coverage guidance, visit the California Workers' Comp page. For Sacramento-area service, see our Sacramento Workers' Comp page. Call 916-822-9595 — open 365 days a year, 8am to 9pm Pacific, including all major holidays.