Workers’ Compensation in California: 10 FAQs Business Owners Ask (and Should)

Workers’ compensation is a legal requirement in California, but for many employers, it is also one of the most misunderstood types of insurance.

Today, I want to answer the most common questions we hear from business owners, HR leaders, and nonprofit directors. These questions come up often during policy renewals, audits, hiring, and unfortunately, when an injury has already happened.

If you are paying for workers’ comp (and you are), it is important to understand what it covers, how to use it, and which services might already be included. This guide is here to help.

1. Is workers’ compensation insurance required in California?

Yes, it is. In California, you are required to carry workers’ compensation insurance if you have even one employee. That includes full-time, part-time, temporary, and seasonal staff. The penalties for not carrying coverage can be significant, including stop-work orders and costly fines. In some cases, noncompliance can even result in criminal charges.

Tip: Even if you pay someone as an independent contractor, it is worth checking with your broker to confirm they meet the legal definition. Frequently, they are considered employees in the eyes of the law.  Misclassification is a common source of risk.

2. How is my workers’ comp premium calculated?

Your premium is based primarily on your payroll and the type of work your employees perform. Jobs with higher physical risk will naturally have higher rates. A law firm and a plumbing company with the same payroll will pay very different premiums.

Your claims history also plays a role. For larger employers, this is measured by something called the “experience modification rate,” or ex-mod. If your history is better than average, you may qualify for a lower rate. If you have more or larger claims, your premium will increase.

Tip: Maintaining a strong safety record can have a direct and lasting impact on your premium.

3. What does workers’ comp actually cover?

Workers’ compensation covers injuries or illnesses that occur because of a person’s job. That might include a fall, a repetitive stress injury, or a medical condition caused by long-term exposure to something at work.

If a claim is accepted, the policy will pay for medical treatment, a portion of the employee’s lost wages, rehabilitation services, and in some cases, job retraining or permanent disability benefits. If a work-related injury results in death, there may even be benefits available to the employee’s dependents.

Tip: Workers’ comp also protects the employer. Most policies include liability coverage that can help prevent lawsuits related to workplace injuries.

4. Does it cover remote or hybrid employees?

Yes, it can. If an employee is working from home and is injured while performing their job duties, the first place they will look for relief is the workers compensation policy.

However, these claims can be harder to evaluate, especially when there are no witnesses or defined workspaces. That is why it helps to set clear guidelines around work hours, designated spaces, and communication practices for remote team members. Further, your workers compensation carrier may have suggestions for controlling potential claims for remote employees.

Tip: Many insurance carriers offer ergonomic assessments or home office safety tools for free. If your policy includes them, take advantage.

5. What should I do if an employee is injured?

First, ensure the employee receives any necessary medical attention. Then report the injury to your insurance carrier as quickly as possible. California employers are also required to provide the employee with a claim form, which allows them to officially file the claim.

Keep detailed notes about what happened, who was involved, and where the injury occurred. The claims adjuster will help guide you from there, but timely reporting is one of the most important things you can do and is required!

Tip: If you are unsure what to do, contact your broker. A good broker will walk you through the process and connect you with the claims department.

6. How can I reduce workers’ comp claims?

The best way to reduce claims is to prevent them in the first place. That means having a safety culture, clear policies, and practical training in place. It also means using the loss control resources that many carriers already include with your policy.

Depending on your provider, you may have access to safety consultants, jobsite walkthroughs, training modules, or written safety plans.

Tip: These resources are often already included in your premium. If you are not sure what your carrier offers, ask. You are paying for these services, use them.

7. What is a Return-to-Work (RTW) program?

A Return-to-Work program helps injured employees transition back into the workplace safely and gradually. Instead of staying out of work for extended periods, they might return in a modified role or on a reduced schedule while they heal.

These programs are good for both the employee and the employer. They reduce the cost and length of disability claims and help the employee stay connected to their role and team.

Tip: Some carriers will assist with return-to-work planning, including coordination with physicians and claims managers. One of our carriers consistently reports disability durations are 20 percent shorter than the industry average because of their proactive approach. This will reduce the cost of claims and improve the experience modification or claims experience.

8. How often should I review my policy?

At a minimum, your policy should be reviewed annually. That review is especially important if your business has grown, changed its services, added new employees, or experienced multiple claims.

Changes in payroll, locations, or job classifications can all impact your coverage. A mid-year check-in with your broker is always a smart move if something shifts.

Tip: The best time to make adjustments is before your renewal date. If you are unsure whether something should trigger a review, reach out and ask.

9. Are volunteers covered under workers’ comp?

No, not automatically. Workers’ comp is designed to cover employees. If your nonprofit or organization relies on volunteers, you may need to add them through a policy endorsement (which is not offered by all insurance carriers) or consider a separate volunteer accident policy.

This is especially important if volunteers are performing physical tasks, driving, or interacting with the public on your behalf.

Tip: Many nonprofits assume volunteers are covered, only to find out during a claim that they are not. We can help you check your current policy to make sure there are no surprises.

10. What should I expect from my insurance broker?

Your broker should help you understand your policy, guide you toward the right carrier for your specific needs, and support you before, during, and after a claim. They should also help you access the safety and risk management services that are often included with your policy.

At H.N. Christensen, this is how we approach every relationship. We are not just here to place coverage. We are here to provide thoughtful guidance, build long-term trust, and help you protect your people and your purpose.

Tip: If you have ANY out of state employees, it is CRITICAL that you discuss this with your insurance broker or insurance carrier ASAP.  There are some states which cannot be added to your policy.

You Are Already Paying for This, Use It

Many of the most valuable tools in workers’ compensation (safety support, return-to-work planning, training resources) are already included in your premium. Yet most employers do not know they are available.

If you are paying for coverage, let us help you make the most of it.

Let’s Talk

If you are reviewing your policy, hiring new staff, planning to expand, or simply want a clearer understanding of what your workers’ compensation insurance includes, we would be happy to help.

📩 Message me directly on LinkedIn or reach out to our team at H.N. Christensen Insurance Brokers. We are always here to help you protect your people, your mission, and your peace of mind.