Workers' compensation is the nation's oldest social insurance program: It was adopted in most states, including California, during the second decade of the 20th century. The workers' compensation system is based on a trade-off between employers and employees. Employees are entitled to receive prompt, effective medical treatment for on-the-job injuries or illnesses no matter who is at fault and, in return, are prevented from suing employers over those injuries.
As a result, California employers are required by law to have workers' compensation insurance, even if they have only one employee. And, if your employees get hurt or sick because of work, you are required to pay for workers' compensation benefits. Workers' comp insurance provides basic benefits, including medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits and a return-to-work supplement, and death benefits.
The vast majority of workers' compensation claims are resolved without any problems. However, sometimes a disagreement can arise between you and your employee over issues such as whether the injury was sustained on the job or how much in benefits they are entitled to receive.
When a dispute like that arises, the Division of Workers' Compensation can help resolve it through its Information and Assistance Unit or by going before a judge at one of the division's 22 local district offices plus satellites.
Please be advised that if you are a roofer and don't have any employees, you are still required to carry workers' compensation insurance.
If you are an out-of-state employer you may need workers' compensation coverage if you have any employees regularly working in California, or if you enter into a contract of employment here.
frequently Asked Questions
Q. Who is required to purchase workers' compensation insurance?
A: All California employers must provide workers’ compensation benefits to their employees under California Labor Code Section 3700. If a business employs one or more employees, then it must satisfy the requirement of the law.
Sometimes a business owner (sole proprietor) may desire to purchase workers’ compensation insurance to cover himself/herself only. The inclusion of a sole proprietor must be clearly stated in the workers’ compensation policy or must be added as a coverage endorsement to the policy. Since workers’ compensation insurance is a type of liability insurance where the employer assumes complete liability for all worker injuries, a workers’ compensation policy for a sole proprietor may not be the best choice.
Purchasing health, life, and/or disability income insurance can be a viable option to workers’ compensation for a sole proprietor. Contact a licensed commercial broker-agent or a casualty broker-agent for further information and consultation.
Executive officers and directors of corporations must be included in workers’ compensation coverage, unless the corporation is fully owned by the directors and officers. If the directors and officers fully own the corporation, then they may elect to be excluded from workers’ compensation benefits. Fully owned corporations may want to discuss the option to include or exclude their officers and directors with a licensed commercial broker-agent.
California Labor Code Section 3351 defines who is an employee, and therefore who can be covered under a workers’ compensation policy. Whether a business is a sole proprietorship, a partnership, or a corporation, it is beneficial to develop a working relationship with a reliable, competent broker-agent who can explain coverage eligibility issues and present options based on the organization model of a business.
Q: How can I find out who provides workers' compensation coverage for another business in California?
A: The DWC does not provide workers’ compensation insurance for employers and does not maintain information about employers and their respective insurers. To find out which insurer provides workers’ compensation insurance for a specific employer, contact the Workers’ Compensation Insurance Rating Bureau (WCIRB). The roster of self-insured employers can be found on the Self Insurance Plans Web page.
Basic facts for employers on workers’ compensation can be found in the DWC’s fact sheet for employers.
Q: Where do I get workers' compensation insurance?
A: Employers must purchase workers’ compensation insurance from either a licensed insurance company or through the State Compensation Insurance Fund (State Fund). Employers may also have the option to self-insure for workers’ compensation.
A commercial broker-agent can assist a business with purchasing workers’ compensation insurance from a licensed insurance company and can assist with information on State Fund and self-insurance. Also, information on insurance companies licensed to sell workers’ compensation insurance and an online rate comparison of the top 50 workers’ compensation insurers can be accessed on the California Department of Insurance (CDI) Web site at www.insurance.ca.gov.
State Fund is a state-operated entity that exists in order to transact workers’ compensation on a non-profit basis. State Fund competes with private workers’ compensation insurance companies for business and also operates as the insurer of last resort if private companies are not willing to offer workers’ compensation insurance.
Q: What about self-insurance?
A: Self-insurance requires state approval, a net worth of at least $5 million, net income of $500,000 per year and posting of a security deposit. While historically only very large companies could self-insure because of legal requirements, in recent years group self-insurance, in which several small employers in the same homogenous industry pool their workers' compensation liabilities, has increased in popularity as an alternative to traditional coverage. Contact your broker or the state's Office of Self Insurance Plans for information on how to self-insure.
A self-insured employer has the option of administering its own workers' compensation claims or contracting with a third party administrator (TPA) to provide these services.
Q: How much does workers' compensation insurance cost?
A: Workers' compensation insurance premium rates are not regulated by the state. While the Workers’ Compensation Insurance Rating Bureau – the licensed statistical agent for the state insurance commissioner – issues recommended rates and carriers must file their rates with the California Department of Insurance, rates can vary from carrier to carrier. Like any good consumer, you should shop around for a carrier that best meets your needs. Cost is one consideration, but there are other factors to look at: services provided, ease of access to the claims adjusters, their familiarity with your industry, the doctors in their network, etc. If you have a broker or agent, he or she should be able to give you expert guidance.
Q: What determines how much I’ll pay for my premiums?
A: A number of factors go into determining the annual premium your insurance carrier will charge. These include your industry classification, your company's past history of work-related injuries (known as your experience modification), your payroll, any special underwriting adjustments such as use of a certified health care organization, and any special group or dividend programs you may be eligible for.
Q: Can my employees help pay for my workers' compensation insurance?
A: No. Workers' compensation insurance is part of your cost of doing business. An employer cannot ask employees to help pay the insurance premium.
Q: What are my posting requirements?
A: You must post the “notice to employees” poster in a conspicuous place at the work site. This poster provides employees with information on your workers' compensation coverage and where to get medical care for work injuries. Specific requirements are contained in sections 3550-3553 of the California Labor Code. Failure to post this notice is a misdemeanor that can result in a civil penalty of up to $7,000 per violation. Contact your insurer to get the posting notice and the required information that must be included on it.
You must also provide newly hired employees with a workers’ compensation pamphlet explaining their rights and responsibilities.
Q: Where do I get the claim forms I need to give my employees if they get sick or hurt because of work?
A: Your workers' compensation claims administrator (generally your insurance carrier or third party administrator if you are self-insured and have one) provides the claim form in the quantities you need. You can also download it from the forms page of the DWC website.
Q: What should I do if my employee gets sick or hurt on the job?
A: You must:
Provide a workers’ compensation claim form to them within one working day after the work-related injury or illness is reported
Return a copy of the completed form to the employee within one working day of receipt
If your employees are covered by a Medical Provider Network (MPN), make sure the injured worker is provided with a complete MPN employee notification and that an initial medical evaluation is arranged with an MPN physician
Forward the claim form, along with your report of occupational injury or illness, to the claims administrator within one working day of receipt
Within one working day of receiving the employee’s claim, authorize up to $10,000 in appropriate medical treatment
Provide transitional work (light duty) whenever appropriate
If the employee is the victim of a crime that happened at work, you must give notice of workers’ compensation eligibility within one working day of the crime.
Q: Can my injured employee work while he or she is recovering?
A: Soon after the injury, the employee’s treating doctor will examine him or her and send a report to the claims administrator regarding the injured employee’s medical condition. If the treating doctor says the injured employee is able to work, the doctor should describe:
Clear and specific limits, if any, on the employee’s job tasks while recovering. These are called work restrictions. They are intended to protect your employee from further injury (example: no work that requires repetitive bending or stooping);
Changes needed, if any, in the employee’s schedule, assignments, equipment or other working conditions while recovering (example: provide headset to avoid awkward positions of the head and neck);
If the treating doctor reports that the employee cannot work at all while recovering, the employee cannot be required to work.
Q: My employee has work restrictions. What does that mean?
A: If the employee’s treating doctor reports that he or she can return to work under specific work restrictions, any work you assign to the employee must meet these restrictions. You might, for example, change certain tasks or provide helpful equipment. If you do not have work available that meets these restrictions, the injured employee cannot be required to work.
Q: What if my employee has no work restrictions?
A: If the employee’s treating doctor reports that he or she can return to work without restrictions, you usually must give your employee the same job and pay they had before they were injured. You can require the injured employee to take the job. This could happen soon after the injury, or it could happen much later, after his or her condition has improved.
Q: My injured employee is ready to return to work. What kind of work may I offer her?
A: The job must meet the work restrictions in the doctor’s report. The offer could involve:
Regular work: Your employee’s old job, for a period of at least 12 months, paying the same wages and benefits as paid at the time of an injury and located within a reasonable commuting distance of where your employee lived at the time of the injury.
Modified work: Your employee’s old job, with some changes that allows her do to it. If your employee’s doctor says she will not be able to return to the job she had at the time of injury, you are encouraged to offer her modified work instead of supplemental job displacement benefits (SJDB). The alternative work must meet your employee’s work restrictions, last at least 12 months, pay at least 85 percent of the wages and benefits your employee was paid at the time she was injured and be within a reasonable commuting distance of where your employee lived at the time of injury.
Alternative work: A new job at your business. If your employee’s doctor says she will not be able to return to the job she had at the time of injury, you are encouraged to offer your employee alternative work instead of SJDB. The alternative work must meet your employee’s work restrictions, last at least 12 months, pay at least 85 percent of the wages and benefits your employee was paid at the time she was injured, and be within a reasonable commuting distance of where your employee lived at the time of injury.
If you offer your employee modified or alternative work, your employee may have only 30 days to accept the offer. If your employee doesn’t respond within 30 days, you may withdraw the offer.
If your employee fails to respond to the offer of modified or alternative work within 30 days or rejects the job offer, your employee will probably not be entitled to supplemental job displacement benefits.
Q: What are medical provider networks?
A: A medical provider network (MPN) is a group of health care providers set up by your insurer (or you if you are a self-insured employer) or by an entity that provides physician network services and approved by DWC's administrative director to treat workers injured on the job. Each MPN includes a mix of doctors specializing in work-related injuries and doctors with expertise in general areas of medicine. If your employees are covered by an MPN, their workers’ compensation medical needs will be taken care of by doctors in the network unless they were eligible to pre-designate their personal doctor and did so before their injury happened.
Q: What is a health care organization?
A: A health care organization (HCO) is an organization certified by the DWC to provide managed medical care to injured workers.
Q: What does predesignating a personal doctor involve?
A: This is a process your employees can use to tell you they want their personal physician to treat them for a work injury. Employees can pre-designate their personal doctor of medicine (M.D.) or doctor of osteopathy (D.O.) only if the following conditions are met:
The employee gives you a written notice predesignating the employee's personal physician or medical group prior to the date of injury for which treatment is sought and the notice includes the physician's name and business address;
The employee has healthcare coverage for non-occupational injuries or illnesses on the date of injury in a plan, policy or fund; and
The employee's personal physician or medical group agrees to be predesignated prior to the dates of injury.
The DWC has a form for predesignating a personal physician on the forms page of its website.
Q: My employee would like to be treated by his or her personal chiropractor or acupuncturist. How does that work?
A. If you or your insurer does not have a MPN, the employee may be able to change his or her treating physician to their personal chiropractor or acupuncturist following a work-related injury or illness. In order to be eligible to make this change, the employee must give you the name and business address of a personal chiropractor or acupuncturist in writing prior to the injury or illness, using a form called the notice of personal chiropractor or personal acupuncturist.
Q: This is a family business and I’d like to pay the doctor cash. Is that OK?
A: No. It is illegal for an employer to pay medical bills directly. You must file a claim form (DWC form 1) with your claims administrator for all injuries that require more than first aid.
Q: What can I do if I think an employee's workers' compensation claim is not valid?
A: You should report that opinion to your workers' comp claims administrator. Tell them all the facts you know, any witnesses you may be aware of, and the people they should talk to. Follow up any phone or verbal report with a letter.
Q: I received a notice of hearing on a claim for a person I never heard of and didn’t hire. What should I do?
A: Inform your claims administrator and follow up with a letter.
Q: Isn’t workers’ comp fraud a crime? Who investigates these cases?
A: Yes, workers’ compensation fraud is a crime and it can come in many forms: a worker saying they were injured on the job when their injury really occurred while skiing; an employer saying their employees work at desk jobs when they’re really construction laborers; a medical provider billing for six treatments on an injured worker when they only provided two, etc. These are just a few examples of fraud in the workers’ comp system. Fraud is a serious problem and should be reported to the California Department of Insurance (CDI) for investigation. The CDI has more information regarding fraud at its website. The CDI works closely with other agencies to investigate possible fraud cases and also works with local district attorneys’ offices to prosecute those caught violating the law.
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