Key points
- California employers must carry workers' compensation, even with only one employee.
- C-8 Concrete, C-20 HVAC, C-22 Asbestos Abatement, C-39 Roofing and C-61/D-49 Tree Service contractors must carry it whether or not they have employees.
- An exemption on file means the contractor certified to CSLB that it has no employees. It is not insurance.
- Under current law, workers' compensation becomes required for all licensees, with or without employees, on January 1, 2028.
The basic rule
The California Department of Industrial Relations (DIR) says California employers are required by law to have workers' compensation insurance, even if they have only one employee (Labor Code section 3700). DIR's Labor Commissioner notes this includes family members who work in the business.
For contractors, CSLB adds a licensing rule: to hold an active license, a contractor must give CSLB a certificate of workers' compensation insurance, a certification of self-insurance issued by DIR, or a signed exemption certifying it has no employees.
Classifications that must always carry it
Under Business and Professions Code section 7125, contractors holding these classifications must carry workers' compensation insurance or a valid certification of self-insurance whether or not they have employees:
- C-8 Concrete
- C-20 Warm-Air Heating, Ventilating and Air-Conditioning
- C-22 Asbestos Abatement
- C-39 Roofing
- C-61/D-49 Tree Service
CSLB also says a contractor cannot be exempt if its qualifying individual is a Responsible Managing Employee (RME).
What an exemption means
A contractor outside those classifications may file an exemption with CSLB if it has no employees subject to California workers' compensation law. The exemption is a statement by the contractor, not a policy:
- It certifies that, at the time it was filed, the contractor has no employees who need coverage.
- Once the contractor hires anyone in a way covered by workers' compensation law, the exemption is no longer valid. CSLB requires proof of coverage within 90 days of the hire.
- It does not cover anyone who is injured on the job.
For homeowners: if a contractor with an exemption on file shows up with a crew, ask for proof of workers' compensation coverage. CSLB warns owner-builders that if uninsured workers are injured, the property owner could be asked to pay through a homeowner's policy or face lawsuits.
What happens without coverage
- License suspension: CSLB says failure to maintain workers' compensation insurance will result in the license being suspended.
- Discipline: under section 7125, willful or deliberate disregard of workers' compensation law is a cause for disciplinary action.
- Stop orders and penalties: DIR's Labor Commissioner must issue a stop order and penalty assessment that bars use of employee labor until coverage is bought. The penalty is the greater of twice the premium the employer would have paid while uninsured, or $1,500 per employee.
Workers' compensation and building permits
Under Labor Code section 3800, a city or county that issues building permits must have each applicant sign a declaration, under penalty of perjury, verifying workers' compensation coverage or exemption. So a permit on file is also a record that someone declared coverage or an exemption for that job.
The change coming on January 1, 2028
Senate Bill 216 (2021) set a date after which all licensed contractors must carry workers' compensation, regardless of whether they have employees. Senate Bill 1455 (2024) moved that date from January 1, 2026, to January 1, 2028.
CSLB explains that until January 1, 2028, licensees in all trades except C-8, C-20, C-22, C-39 and D-49 can continue to claim an exemption if they have no employees. SB 1455 also directs CSLB to set up a process to verify exemption eligibility by January 1, 2027. Contractors should watch CSLB's announcements for how the 2028 change will be applied.
How to check a contractor's coverage
CSLB's Check A License page shows the workers' compensation policy or exemption on file for each license, including the insurance company and policy dates when coverage is reported.
Sources
- Workers' Compensation Requirements (Contractors State License Board (CSLB))
- Business and Professions Code 7125 (CSLB)
- Exemption from Workers' Compensation Insurance (CSLB)
- Industry Bulletin #24-07: New Law Changes in 2025 (SB 1455) (CSLB)
- Board packet: Senate Bill 1455 (Ashby), CSLB sunset extension bill (CSLB)
- Building Official Information Guide (CSLB)
- Owner-Builder Responsibilities (CSLB)
- Information for employers (California Department of Industrial Relations, Division of Workers' Compensation)
- FAQ: Do I have to have workers' compensation insurance? (California Department of Industrial Relations, Labor Commissioner's Office)
This guide is general information, not legal advice. Rules change; confirm current requirements with the agency that issues the license or permit. Last reviewed Sep 29, 2026.