California updated its Workers’ Compensation insurance requirements for all contractors a few years ago with Senate Bill 216, with a deadline of January 1, 2026. The deadline was later extended to January 1, 2028, under Senate Bill 1455. In this guide, we will explain both bills, discuss the impact on California contractors regarding Workers’ Compensation and licensing, highlight the importance of carrying Workers’ Comp, explain how to obtain the right coverage, including a Ghost policy, and emphasize the need to remain compliant with state regulations.

California Bill SB 216 Explained

All licensed contractors in California must carry Workers’ Compensation insurance, whether or not they have employees, under SB 216 and SB 1455. The first phase under SB 216 took effect in 2023 for Concrete (C-8), HVAC (C-20), Asbestos Abatement (C-22), and Tree Service (D-49) contractors, requiring these classifications to buy Workers’ Compensation insurance regardless of whether they employ workers. Roofing contractors (C-39) who don’t have employees have been required to carry Workers' Compensation insurance before SB 216 was passed.

All other contractors under SB 216 were required to comply with the new Workers’ Comp requirement by January 2026, but this deadline has been extended to January 2028 under the new bill, SB 1455.

Until 2028, proof is required for the 2023 trades and for any licensee with employees. Beginning Jan 1, 2028, all active licenses must show proof of Workers’ Comp or a verified exemption.

Why Is Workers’ Compensation Insurance Critical?

Workers’ Compensation insurance protects both employees and employers. Employees who are injured or become ill on the job will receive medical care, wage replacement (up to a certain amount), temporary or permanent benefits, and death benefits. It helps cover employees’ costs while they’re out of work and facilitates their return to work.

Employers benefit from Workers’ Compensation insurance in that they aren’t paying out of pocket for a worker’s medical expenses and lost wages. It also prevents workers from suing employers for negligence.

Moreover, typically, clients will ask to see proof of Workers’ Compensation insurance (in addition to General Liability coverage) before awarding a job. In addition to complying with state requirements, having necessary insurance coverage demonstrates a contractor’s professionalism and accountability, opening doors to more and bigger projects.

How Are California Contractor Workers’ Comp Requirements Changing in 2026?

By 2023, specific contractor classifications without employees were required to purchase and demonstrate Workers’ Comp insurance during their licensing process (new and renewal). Now, all remaining contractor classifications, other than those exempted, will have to buy coverage between 2026 and 2028.

Do All Changes Impact all Contractors?

All contractors in California, whether they have employees or not, will be required to carry Workers’ Comp insurance, except for joint ventures with no employees that file a certificate of exemption with the CSLB.

What Is the Deadline for Obtaining Workers’ Compensation Coverage?

The updated deadline to obtain Workers’ Comp insurance is January 2028. The enforcement begins in 2026 with final enforcement by 2028. The deadline extension was implemented to give the CSLB more time to develop its system, which includes an exemption verification tool.

What Can Happen If You Don't Have the Right Insurance?

Contractors who do not have the right Workers’ Compensation coverage can face fines and license suspension in addition to being responsible for work-related injuries and illnesses. In California, penalties can range from $10,000 to $100,000 for non-compliance. The California Division of Labor Standards Enforcement (DLSE) can stop a business from continuing its operation until it obtains Workers’ Comp insurance.

How to Obtain Contractor Workers’ Compensation Insurance 

At CCIS Bonds, in addition to providing Contractor License Bonds for general and specialty contractors, we also offer Workers’ Compensation insurance.

What You Need to Get a Workers’ Comp Quote

Get a Workers’ Comp quote online with CCIS Bonds. It’s easy and fast. Just fill out the online form, and we’ll send you a quote to review.

Finding the Right Coverage for Your Needs

CCIS Bonds provides both standard Workers’ Compensation for contractors with employees and a Ghost policy for those without employees.

Workers’ Compensation Insurance vs. Ghost Policies

Workers’ Compensation insurance protects employees who are injured on the job by covering medical expenses, lost wages, and rehabilitation costs. Ghost policies function differently. They can satisfy proof of insurance, but typically do not cover the owner unless the owner is specifically included. CSLB is also creating a verification process for legitimate no-employee exemptions under SB 1455.

A Ghost policy serves as proof of coverage, helping contractors meet state Workers’ Comp requirements, remain eligible for projects, and prevent disqualification during the bidding process.

Stay Compliant with the Right Workers’ Compensation Insurance 

Contractors in California are required to get and show proof of Workers’ Compensation insurance. CCIS Bonds can help you get the right coverage and comply with state regulations.

Frequently Asked Questions

How will these changes affect the cost of insurance for contractors in California?

Beginning in 2028, California contractors without employees will also be required to carry Workers' Compensation insurance. Since 2023, this mandate has already applied to specific trades-including Concrete, HVAC, Asbestos Abatement, and Tree Service-and will soon expand to all license types.

For those without employees, a Ghost policy offers a cost-effective way to meet this requirement. Like standard Workers' Comp coverage, it's rated on payroll; however, because these businesses have no active payroll, premiums are typically lower than traditional Workers' Compensation policies.

What steps can California contractors take to prepare?

Contact CCIS Bonds to discuss your Workers' Comp needs and how to meet California's new requirements.

How can contractors prove they have the right coverage?

CCIS Bonds can provide you with a certificate of insurance demonstrating proof of Workers' Comp insurance.

Will Workers' Compensation insurance be required to get a contractor's license?

To hold or apply for a contractor's license in California, businesses with employees must carry Workers' Compensation insurance. Under SB 216, this requirement has been expanded to include all licensed contractors, even those without employees, unless they qualify for a specific exemption. The rule first took effect on January 1, 2023, for select trades and will apply to all remaining contractors by January 1, 2028.

NOTE: The insuring agreement in a policy sets out the covered perils, assumed risks, and nature of coverage that the insurance company provides to its insured in exchange for the premiums paid. Thus, the terms and conditions of the policy will dictate whether coverage exists and the nature of any potential benefits.

Please review all applicable state laws and regulations or consult with your legal professional concerning your compliance as to your business operations.