Does My Employer Have to Carry Workers' Comp Insurance in California? (Labor Code 3700)

Every employer except the state shall secure the payment of compensation in one or more of the following ways: (a) By being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this state. (b) By securing from the Director of Industrial Relations a certificate of consent to self-insure either as an individual employer, or as one employer in a group of employers, which may be given upon furnishing proof satisfactory to the Director of Industrial Relations of ability to self-insure and to pay any compensation that may become due to his or her employees.

Which California employers must have workers' comp insurance?

Almost all of them. Under Labor Code 3700, a California employer with at least one employee must either buy a workers' comp policy or get state approval to self-insure.

The law gives an employer exactly two lawful paths, not a range of choices. Route one is a policy from an insurer licensed to write workers' comp in California. Route two is a certificate of consent to self-insure, issued by the Director of Industrial Relations after the employer proves it can pay claims itself. The Department of Industrial Relations (DIR) states the baseline rule in plain terms. If a business employs one or more employees, it must satisfy this requirement. There is no size cutoff and no industry exception. The only employer this statute exempts by name is the state itself. Counties, cities, and other public entities get their own path to a self-insurance certificate under the same section.

Who counts as an employee for this insurance duty?

Nearly every worker counts, including part-time, temporary, and undocumented workers. Only a few narrow categories are excluded by name.

Labor Code 3351 defines "employee" in broad terms. Labor Code section 2775's ABC test then decides employee versus independent-contractor status under the Labor Code. Immigration status does not change the answer. Labor Code 3351(a) counts people who are not citizens or nationals of the United States as employees. Labor Code 1171.5 confirms that state job protections apply no matter a worker's immigration status. Our Labor Code 3351 guide covers this topic in depth. A narrow exception covers some household workers. Under Labor Code 3352(a)(8), a home employer need not cover a domestic worker whose work was both under 52 hours and under $100 in pay in the 90 days before the injury. Most housekeepers, caregivers, and nannies work past that line and stay covered.

What are my employer's two options for complying with Labor Code 3700?

An employer can buy a commercial policy or qualify as a self-insured employer. Either way, the duty is personal to that employer and cannot be handed off by contract.

Most employers choose route one: a policy from an insurer licensed to write workers' comp in California, including the State Compensation Insurance Fund. For route two, DIR's own guidance lists real financial thresholds. An employer that wants to self-insure generally needs state approval, plus at least $5 million in net worth, $500,000 in net income a year, and a security deposit. Smaller employers in the same industry can sometimes pool their comp liabilities through a group plan instead of qualifying alone. A staffing agency or a subcontractor does not remove an employer's own duty to keep its workers covered.

What happens if my employer does not have workers' comp insurance?

An illegally uninsured employer can face four separate consequences at once. They are a stop order, a criminal charge, a civil penalty, and your right to sue in civil court.

These four consequences are not alternatives. More than one can apply at once. Labor Code 3706 lets an injured worker sue an uninsured employer in civil court for damages, instead of being limited to the comp system. Labor Code 3602 is the rule that would otherwise make comp benefits a worker's only option against the employer. That same section names Section 3706 as one of its own built-in exceptions. The exception exists because the employer broke the basic trade behind Labor Code 3600's no-fault bargain. A worker gets benefits without having to prove fault, and in exchange the employer gets protection from lawsuits. Skip the coverage, and that lawsuit protection goes away too.

Can I still get paid if my employer turns out to be uninsured?

Yes. The Uninsured Employers Benefits Trust Fund can pay your benefits, then the state goes after your employer for the money.

The Uninsured Employers Benefits Trust Fund, usually shortened to UEBTF, is a special state fund built for this exact problem. Labor Code 3716 states the purpose directly. The fund exists so that workers employed by illegally uninsured employers are not left without benefits. Once the fund pays a claim, Labor Code 3717 lets the state pursue its own civil action against the employer, or a court judgment, to recover what it paid, plus the state's costs and attorney fees. A worker still has to prove the claim the usual way. The fund changes who pays first, not what has to be shown.

How can I check whether my employer has workers' comp insurance?

Check the notice posted at your workplace, ask your employer directly, or contact the Workers' Compensation Insurance Rating Bureau (WCIRB). DIR itself does not keep that list.

A covered employer must post a notice about its coverage where workers can see it, so that notice is usually the fastest check. If you cannot find it, DIR's own guidance is direct about the limit of its role. The Division of Workers' Compensation does not track insurer information for individual employers. A worker who needs that should contact the Workers' Compensation Insurance Rating Bureau instead. If your employer self-insures rather than buying a policy, DIR keeps a roster of approved self-insured employers through its Self-Insurance Plans program. Checking first can help, but it is not required.

If your employer turns out to be uninsured, act quickly to protect your claim. Report the injury in writing, get medical care, and keep a copy of every form. A claim against an uninsured employer still goes through the normal workers' comp steps, including a possible hearing at the WCAB. Our WCAB district office guide lists every location in the state. Yazdchi Law P.C. represents injured workers across California from its office in Palmdale and reviews each uninsured-employer or UEBTF matter individually. Call (661) 273-1780 or use the contact form to have a claim reviewed.