California law requires businesses to provide Workers’ Compensation insurance to their employees, even if only one employee exists. If a worker gets injured or sick because of work, Workers’ Compensation provides medical care, temporary and permanent disability, and death benefits.
Employers who fail to purchase Workers’ Compensation insurance violate the California Labor Code. According to the California Insurance Department, the California Labor Code “makes it a misdemeanor punishable by either imprisonment in the county jail for up to one year, a fine of up to double the amount of Workers’ Compensation premium that would have been necessary to secure coverage during the illegally uninsured period (in an amount not less than $10,000), or both. Additionally, the state issues penalties of up to $100,000 against illegally uninsured employers. If an employee gets hurt or sick because of work and the employer is not insured, the employer is responsible for paying all bills related to the injury or illness.”
Project owners typically require contractors to show evidence of Workers’ Compensation coverage with a certificate of insurance (COI) in contractual agreements. A general contractor (GC) will also require that all subcontractors provide a COI. If the subcontractor does not have insurance, the GC must provide Workers’ Comp coverage.
Employee Injuries Prevalent in the Construction Industry
According to the most recent report from the Bureau of Labor Statistics (BLS), in 2022, 1,069 construction workers nationwide died while working, a rate of 9.6 fatalities per 100,000 full-time employees. The Occupational Safety and Health Administration’s “Fatal Four” leading causes of construction deaths (falls, struck by equipment, caught between objects, and electrocutions) account for 65% of all construction-related deaths.
In addition, according to the BLS, the construction industry saw 169,600 recordable cases of injury and illness in 2022.
The Cost of Construction Worker Injuries
According to the Midwest Economic Policy Institute, fatal construction injuries are estimated to cost the United States $5 billion each year in health care, lost income, reduced quality of life for family members, and lost production. In 2023, construction workers had an absence rate of 2.2% due to injury or illness, according to the BLS.
Furthermore, according to the NSC, the average cost of a construction injury claim (including medical and indemnity costs) is $41,353. Still, that number can climb to over $110,000 for more severe injuries like amputations. Machinery accidents, falls from heights, electrical incidents, and strains and sprains are the most common and costly claims.
In addition to buying Workers’ Compensation insurance, an active loss prevention strategy should be implemented, which includes safety training and regular job site inspections. Also, keeping up to date with safety regulations is important to ensure your construction business complies with any new requirements.