California requires every employer with even one employee to carry workers’ compensation insurance, and the Contractors State License Board (CSLB) ties that requirement directly to your license. For contractors, workers’ comp affects whether your license stays active, how you staff your jobs and what happens if someone gets hurt on a job site.
This page explains who needs coverage in California, the CSLB rules for roofers and other trades, the changes scheduled for 2028, how premiums are calculated and where coverage can come from. For an overview of workers’ comp in every state, see our workers’ compensation insurance guide. For the other policies California contractors usually need, see California contractors insurance.
General information, not legal advice. Last reviewed: October 23, 2026.
Under California Labor Code Section 3700, every employer with one or more employees must provide workers’ compensation benefits. The Division of Workers’ Compensation states that employers are required to have workers’ compensation insurance “even if they have only one employee.”
Licensed contractors also have to meet the CSLB requirement in Business and Professions Code Section 7125. You must keep one of the following on file with the CSLB at all times:
Changes scheduled for 2028: according to the CSLB, SB 1455 (2024) set January 1, 2028 as the date when all licensees, regardless of classification or whether they have employees, will be required to hold workers’ compensation insurance. It also directed the CSLB to establish a process, by January 1, 2027, to verify that contractors without employees are eligible for the exemption. These dates can change, so check the CSLB workers’ compensation page for updates.
[AGENT INPUT: practical tip from a licensed agent on preparing for the 2028 requirement]
Some CSLB classifications cannot use the no-employee exemption. According to the CSLB, all active contractors with these licenses must carry workers’ compensation insurance or a valid Certification of Self-Insurance, whether or not they have employees:
The DWC says the same about roofing: “if you are a roofer and don’t have any employees, you are still required to carry workers’ compensation insurance.” Under Section 7125, if a license with more than one classification includes one of these and no certificate is on file, that classification is removed from the license.
Roofers usually need other coverage as well, such as general liability and commercial auto. See our guide to roofing insurance for California contractors.
[AGENT INPUT: common question California roofers ask when they buy workers’ comp, and the answer from a licensed agent]
Tell us about your business, your trade and your payroll, and a licensed agent will review your coverage options with you.
There is no single price for workers’ comp in California. According to the California Department of Insurance (CDI), insurers operate under an “open” rating system: each company sets its own rates and files them with the CDI, so the same business can receive different quotes. Your premium depends on your classifications, your payroll and your claims history, and it varies from business to business.
The CDI describes the calculation in steps. These are the main factors:
Each part of your operations is assigned a classification. Classification codes are developed by the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) and approved by the Insurance Commissioner. The CSLB also asks licensees to list up to the top three classification codes with the highest estimated payroll on their policy.
The estimated payroll for each classification is multiplied, per $100 of payroll, by the applicable rate. The total is called the “base” premium.
The experience modification compares your claims history with similar employers in your industry. Generally, a modification below 100% reflects better-than-average experience and one above 100% reflects worse-than-average experience.
The base premium can then be increased or decreased by rating plans, usually schedule or judgment rating. Because each insurer files its own rates, the result can differ from one insurer to another.
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Report each employee’s payroll under the classification that matches the work they actually do. The classification determines the rate applied to that payroll.
The CSLB requires continuous coverage. A lapse results in license suspension, and work performed while the license is suspended is considered unlicensed.
According to the CDI, an employer that fails to allow an insurer audit may be liable for a total premium equal to three times the estimated policy premium.
Your experience modification reflects your claims history compared with similar employers, so preventing injuries can affect what you pay in future policy periods.
Because rates are set by each insurer, it can pay to compare. Coverage can come from a licensed insurance company or from the State Compensation Insurance Fund. The CDI rate comparison page has more information.
[AGENT INPUT: practical tip from a licensed agent on managing workers’ comp costs for California contractors]
California contractors have obligations under both the Labor Code and the CSLB rules. These are the main ones, based on official guidance from the DWC and the CSLB:
Coverage is required for employers with one or more employees. According to the DWC, failing to have coverage is a misdemeanor punishable by a fine of not less than $10,000, up to one year in county jail, or both.
Keep a current certificate of insurance, a certification of self-insurance or a valid exemption on file with the CSLB at all times, as required by Section 7125.
If you filed a no-employee exemption and then hire someone, the exemption is no longer valid. The CSLB must receive proof of coverage within 90 days of the hire.
Employers must post the required workers’ compensation notice. According to the DWC, failure to post it is a misdemeanor that can result in a civil penalty of up to $7,000 per violation.
If the Labor Commissioner finds a business operating without coverage, a stop order prohibits the use of employee labor until coverage is obtained. Ignoring it is a misdemeanor punishable by up to 60 days in county jail, a fine of up to $10,000, or both (DWC).
Common questions about workers’ compensation for California contractors. General information, not legal advice. Last reviewed: October 23, 2026.
Yes. Under Labor Code Section 3700, employers with one or more employees must provide workers’ compensation benefits. The DWC says coverage is required “even if they have only one employee.”
Under current law, you can file an exemption only if you have no employees, your license is not qualified by a Responsible Managing Employee, and you do not hold a C-8, C-20, C-22, C-39 or C-61/D-49 classification (CSLB). According to the CSLB, all licensees will be required to hold workers’ comp beginning January 1, 2028.
Yes. The CSLB requires all active C-39 Roofing contractors to carry workers’ compensation insurance or a valid Certification of Self-Insurance, whether or not they have employees.
According to the CSLB, failure to maintain coverage results in license suspension, and any work performed while the license is suspended is considered unlicensed. Disciplinary action can follow.
The CDI explains that the estimated payroll for each classification is multiplied, per $100 of payroll, by the insurer’s rate. That base premium is then adjusted by rating plans and by your experience modification. Because insurers set their own rates, premiums vary by insurer, classification, payroll and claims history.
From a licensed insurance company or from the State Compensation Insurance Fund, which the DWC and the CDI describe as the insurer of last resort. Self-insurance is also possible, but it requires state approval, a net worth of at least $5 million, net income of $500,000 per year and a security deposit (DWC; Office of Self-Insurance Plans).
According to the DWC, it is a misdemeanor punishable by a fine of not less than $10,000, up to one year in county jail, or both. The Labor Commissioner can also assess a penalty equal to the greater of twice the premium the employer would have paid or $1,500 per employee, and an uninsured employer is responsible for the costs of a work injury and can be sued by the injured employee.
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