According to a report from Property Casualty 360, California is starting to implement a new law in 2023 that will require all licensed contractors—even those without employees—to have workers’ compensation coverage by 2026. Currently, all employers in California that have employees are required to have no-fault workers’ compensation coverage. Here, our Fresno workers’ compensation defense lawyer provides an overview of workers’ compensation requirements in California and the state’s new law for contractors.

California Law: Employers Must Provide No-Fault Workers’ Compensation Coverage

Employers in our state must obtain and maintain workers’ compensation insurance coverage for their employees. Under state law (Labor Code § 3700), it is legally mandatory for public and private employers in California to provide workers’ compensation coverage. In effect, no-fault workers’ compensation coverage means that if an employee is injured on the job, they are entitled to receive benefits regardless of who was at fault for the accident.

In California, workers’ compensation benefits include things like medical treatment and wage replacement. Failure to comply with the state’s workers’ compensation requirements can result in fines and even more severe penalties for the employer. It is imperative that all employers understand their responsibilities under the California workers’ compensation system.

New Regulation: Contractors Without Employees Must Obtain Workers’ Compensation Coverage

California lawmakers passed a new regulation that will, over the course of three years, require all licensed contractors in the state to obtain workers’ compensation coverage regardless of whether or not they have an employee on their staff. The new legal requirement for licensed contractors comes out of Senate Bill 2016, which was signed into law by California Governor Gavin Newsom in the Fall of 2022.

As explained by the California Contractors State Licensing Board (CSLB), the updated workers’ compensation requirement applies to all licensed contractors that operate in California, including concrete contractors, HVAC contractors, tree service companies, and asbestos abatement firms. The CSLB will also operate a website through which consumers can confirm that a contractor is properly licensed and that it has the required workers’ compensation coverage.

Note: A significant reason why this regulation is being enacted is that the CSLB has assessed that many contractors in California that lack workers’ compensation insurance actually do have employees at least part of the time—meaning they are in violation of existing state law. As many as 60 percent of licensed contractors without workers’ compensation coverage have appeals, according to CSLB data. The new law is designed to make it easier to enforce workers’ compensation requirements.

Consult With a Workers’ Compensation Defense Attorney in Fresno, California

At Yrulegui & Roberts, we provide personalized, solutions-oriented legal guidance and support to employers, claims administrators, and insurance carriers in California. If you have questions about the state’s new workers’ compensation requirements for licensed contractors, we are here to help. Call us now or connect with us online to arrange a confidential consultation. Our firm provides workers’ compensation defense services in Fresno, Fresno County, and throughout the surrounding communities.