If you run a business or work in California, you might wonder about workers’ compensation insurance. This program helps cover medical costs and lost wages if an employee gets injured at work. However, not everyone falls under this coverage.
Understanding the exemptions can help employers and employees know their rights and responsibilities.
Who doesn’t need workers’ compensation insurance?
In California, certain groups do not require workers’ compensation insurance. These exemptions include:
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- Business owners and sole proprietors: If you own your business and don’t have any employees, you might not need workers’ compensation for yourself. However, the law usually requires coverage if you hire even one employee.
- Corporate officers and directors: Corporation officers and directors can opt out of workers’ compensation if they are fully covered by health insurance. They must also own at least a 15% share of the corporation.
- Independent contractors: Unlike regular employees, independent contractors are not automatically covered by workers’ compensation. Determining if someone is truly an independent contractor depends on specific criteria, such as how much control the company has over their work and how they get paid.
- Volunteers: Because businesses do not pay volunteers, they are not required to cover them with workers’ compensation insurance.
Certain professionals, like lawyers and doctors, can also choose whether to carry workers’ compensation insurance. This applies to those who run their own businesses.
What should you consider?
It’s important to check the specifics of your situation to understand if these exemptions apply to you. Mistakenly assuming you are exempt without meeting the criteria can lead to significant legal issues.
Understanding the exemptions to California workers’ compensation insurance is crucial for both employers and employees. By knowing who is and isn’t covered, you can ensure that your business complies with the law and that workers are protected appropriately.