California Workers’ Comp Laws vs. Other States

In the US, workers’ compensation is regulated at the state level. This means states have widely differing workers’ compensation laws. In most states, with the exception of Texas, employers are required to carry workers’ compensation insurance.

Depending on the state, employers are required to make regular payments to a private insurance company or a state fund. These payments help cover the benefits paid out to injured employees. Benefits may include compensation for lost wages, medical bills, disability, and even death.

Typically, employers covered by workers’ compensation insurance must file a claim with the insurance company and forfeit their right to sue the employer in most cases. To avoid lawsuits, fines, and criminal charges, employers are required to know and understand local regulations governing employee rights. 

How Workers’ Comp Laws Differ Across States

Generally, the differences between workers’ comp laws across the US can be broken down into the following questions:

• Is workers’ compensation coverage required or optional?
• Which employees must be covered by workers’ compensation?

For employees working in high-risk industries like farming and construction, workers’ compensation is generally required. Some states, like Wisconsin and Montana, distinguish between low-risk and high-risk industries to determine workers’ compensation requirements. 

Other states, like Tennessee, Alabama, Missouri, and Mississippi, only require workers’ compensation for businesses that have at least five employees. In some cases, the five employees must be working full-time.

States like California, New York, and Connecticut allow employers to exclude high-level workers from workers’ compensation insurance as long as they provide the correct documentation. Corporate officers, directors, and LLC members may be excluded from workers’ compensation coverage.

States also treat general contractors and sole proprietors differently. In most states, sole proprietors aren’t required to carry workers’ compensation insurance. 

California’s Approach to Workers’ Compensation Requirements

California has few exceptions for workers’ comp coverage, compared to other states. For example, every employer with at least one employee is required to carry workers’ comp coverage. 

The state also doesn’t distinguish between high-risk and low-risk industries to determine coverage requirements. However, insurance companies will assign different rates to determine the insurance premium based on the risks in the workplace.