Any contractor in California that hires an employee must have Workers’ Compensation Insurance. The State of California will take disciplinary action or incur severe penalties against any contractor that does not have a proper Workers’ Comp Policy in place. Not only does the State regulate this coverage but many project managers will request proof of workers’ comp insurance before allowing a contractor on the job.
Cost for Contractor Workers’ Comp in California
Cost for a contractor workers’ comp policy can vary greatly based on the location, payroll amount, classification of workers, and the company’s prior work-related injury history. Policy premium rates range from 3% to 25% of the total payroll amount.
|Classification||Annual Payroll Example||Est. Monthly Comp Premium*|
*Prices shown are based on several factors including, but not limited to, classification, payroll, experience modification and location. Rates do not constitute an offer of coverage and are subject to change at any time. Rates may fall outside average ranges shown here due to exceptional risk factors.
What Does a Workers’ Compensation Policy Cover?
Should an employee get injured, become sick, or die because of work, the workers comp policy will provide benefits to the employee or their family. Possible benefits include medical care,
temporary or permanent disability benefits, partial wage replacement, and death benefits.
In addition to the employee, the contractor is covered by a workers’ comp policy. An employee cannot file a lawsuit against a contractor if they received compensation through the workers’ comp policy. However, a lawsuit can be filed against the employer, if the employer intentionally injures the employee or if the work performed was outside the scope of the worker’s assignment.
Filing with the California Contractors State License Board
Each contractor is required to file a certificate of insurance verifying coverage to the Contractor State License Board. If a contractor does not have any employees, they must file an exemption to the CSLB which can be done here: CSLB Workers Comp Exemption Online Submission.
The workers’ comp filing can and should be completed by your insurance agent or provider. All filings performed by our organization and our partners are sent electronically to the CSLB. You can simply verify your workers’ compensation filing on the CSLB website’s license check.
Payroll and Workers’ Compensation Service Advantage
A contractor's business payroll is in constant fluctuation due to seasonality, job availability, and the ebb and flow of a single project. With workers’ compensation rates directly related to employee payroll, it is at the benefit of the contractor to have the payroll service and workers’ compensation handled by the same provider. This will ensure the business owner doesn’t overpay for coverage or risk a substantial bill during a year-end audit.
CCIS has partnered with ADP to provide both workers’ compensation coverage and payroll services under one roof. Contractors will have the best-in-class payroll service and insurance agent at their service for their required insurance needs. ADP’s Pay-by-Pay Premium Payment Program** eliminates up-front deposits, offers a pay-as-you-go payment option, and eliminates the need to write checks.
|Traditional Comp Carriers||CCIS/ADP Program|
|25-100% deposit required||No deposit required*|
|Premium based on estimated annual payroll||Premium based on actual payroll|
|High risk of additional premium due||Less risk of over or underpayment|
|Mailing checks and risking late payment||No writing checks|
*Mandatory state assessment fees may be required.
What Other Types of Coverages are Required of Contractors in California?
All licensed California contractors are required to carry a $15,000 Contractor License Bond. Certain contractor licenses may require a $12,500 Bond of Qualifying Individual, a $100,000 LLC Employee/Worker Bond, or a Disciplinary Bond, depending on their license status. Contractors may also be required by the owner of a project to provide a bid, performance, and payment bond (often referred to as Contract Surety Bonds) on a job-by-job basis.
**This information covers only the offering of ADP’s Pay-by-Pay Premium Payment Program for Workers’ Compensation, a payroll enhancement feature of ADP’s payroll processing services and does not involve the offer or sale of any insurance product. All insurance products will be offered and sold only through the licensed agents of Automatic Data Processing Insurance Agency Inc. or its license insurance partners. Certain services may not be available in all states. Clients must be using ADP’s tax filing service to take advantage of ADP’s Pay-by-Pay Premium Payment Program is the registered trademark of ADP, Inc.