Most new business owners in the construction industry prefer to do the work themselves rather than hire employees at their early stages. Being a solo contractor with no employees can help to reduce costs while also making it easier for them to manage customer relationships and project quality.  

Whether you are a new business owner or not, the new California law, under senate bill 216, may be confusing at times. Don’t worry, we’ll walk you through all of the requirements you need to be aware of in order to stay in compliance and save money under the law about workers’ compensation insurance.  

Workers’ compensation insurance protects employees or business owners without employees who are injured or sick on the job. It provides them with medical care, temporary and permanent disability benefits, supplemental job displacement benefits, a return-to-work supplement, and death benefits. 

A new California law requires that most employers in the construction industry, carry workers’ compensation insurance, even if you do not have any employees. This will be applied at the beginning of July 2023. 

There are several reasons why workers’ compensation is necessary. The most important thing is to not only stay in compliance with the law and avoid having your business license suspended, but also protect your business and employees from unforeseen accidents. As a result, any work done while the license is suspended is considered to be done without a license, which will harm your business by delaying projects and ultimately losing credibility and customers. 

In order to prevent those consequences, business owners, particularly in the construction field in California, must understand the requirements for workers’ compensation before the beginning of 2023.  

Requirements of workers’ compensation insurance

A new California law would require certain contractors to carry workers’ compensation insurance beginning in 2023, even if they have no employees.  

Beginning in July 2023, the following contractors will be required to obtain worker’s compensation insurance: 

• 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. 

What do you need to be prepared for?

The process of getting Worker Compensation includes:  

• Do the paperwork to fill out regarding the date, time, place, and circumstances of the injury.

• Interview witnesses as appropriate and include their statements in your supporting documentation for the claim.

• File the completed form and supporting claim documentation with your insurer.

• Submit a first report of injury form to your state’s workers’ compensation board if required.

Workers’ compensation options

You may have several options for workers’ compensation depending on what the markets have to offer. The two most common options are pay-as-you-go and annual compensation. Pay-as-you-go is relatively expensive, despite the fact that it gives you a lot of flexibility as your business changes and grows based on how many employees you have each month. While annual compensation is less expensive than other, it is not adjusted for fluctuation after auditing. Therefore, workers’ compensation determination will be based on the business model and your specific needs, as well as your preference for price or flexibility; from there, you can make the best choice for your company.

If you have any further questions about workers’ compensation insurance and how to prepare for it, please feel free to contact us at [email protected] and one of our account managers will send free resources to help your business.