Why Automating Payroll Is a Smart Move for Your Small Business
June 9, 2025
No Comments
Read More »
California workers' compensation insurance: Your guide to requirements and getting a policy
If you’re a California employer looking to protect both your business and your team, you’re in the right place. At Beyond, we provide the essential information you need to understand how workers’ compensation works and how to stay compliant.
Workers’ compensation insurance helps protect both employees and businesses from financial loss due to workplace-related injuries or illnesses. For covered employees, it provides:
Medical care
Wage replacement
These benefits apply only to injuries or illnesses that occur during and because of work duties. This coverage isn’t just important – it’s essential.
Yes. California law mandates that every employer must carry workers’ compensation insurance – even if you have only one employee. This includes part-time workers and employees who are hired remotely but regularly work in California, regardless of where your business is based.
These requirements are outlined in California Labor Code Section 3700.
There are a few limited exceptions, including:
Domestic workers employed by family members
Deputy sheriffs or clerks
Individuals working in exchange for aid or sustenance
Officials of amateur sports events
Volunteers at non-profit recreational camps
Even if exempt, it’s still wise to consider optional coverage for added protection.
If you’re self-employed, California does not require you to carry workers’ compensation. However, many sole proprietors choose to opt in voluntarily to protect themselves in the event of an accident on the job.
A typical policy in California will provide:
Medical treatment for job-related injuries or illnesses
Partial wage replacement during the employee’s recovery period
Again, only conditions that arise out of and in the course of employment are eligible for compensation.
Failing to carry workers’ comp insurance in California can result in serious penalties:
It is a criminal offense punishable by a stop order
Violating a stop order can result in fines starting at $10,000
Additional penalties may include up to one year of jail time
If an employee is injured:
$10,000 fine per employee for compensable claims
$2,000 fine per employee for non-compensable claims
Maximum penalty: $100,000
In short: non-compliance is not worth the risk.
California employers have several options:
Licensed commercial insurance carriers
The State Compensation Insurance Fund (SCIF)
Self-insurance, if approved by the state
With Beyond, you also have access to pay-as-you-go plans that make budgeting easier, eliminating large upfront payments and helping you stay audit-ready.
California employers have several options:
Licensed commercial insurance carriers
The State Compensation Insurance Fund (SCIF)
Self-insurance, if approved by the state
With Beyond, you also have access to pay-as-you-go plans that make budgeting easier, eliminating large upfront payments and helping you stay audit-ready.
In a traditional plan, premiums are based on an estimated total of your company’s annual payroll. Here’s how it typically works:
The insurer calculates your premium upfront
You pay a lump sum, followed by monthly or quarterly installments
At the end of the year, the insurer conducts a payroll audit to determine the actual premium
If you overpaid, you get a refund — if you underpaid, you’ll be billed the difference
While this is a familiar model, it often requires large upfront payments and may lead to surprises at year-end.
With pay-as-you-go workers’ comp, your premiums are calculated each payroll cycle, meaning you only pay for the coverage you actually need — no guesswork.
Benefits include:
No upfront lump sum payments
No year-end audits
Automatic premium adjustments when employees are added or removed
Easy integration with most online payroll systems
It’s no surprise this model is gaining popularity with businesses of all sizes. For more details, check out our pay-as-you-go guide.
Need help navigating workers’ compensation compliance in California? These resources can guide you:
California Labor Code §3700 – Workers’ Compensation and Insurance requirements
At Beyond, we offer more than just guidance – we provide smart tools to make your job easier. Try our free California payroll calculator to quickly determine accurate withholdings and deductions for any employee payment.
In California, carrying workers’ compensation is not just a legal obligation – it’s a safeguard for your business and a sign of care for your team.
Employees are covered if they miss work due to illness or injury
Employers are protected from costly lawsuits
Pay-as-you-go options help you stay compliant without disrupting your cash flow
Need help choosing a plan that fits your business? The Beyond team is here to support you every step of the way.
