California has had their hand on the throttle to make sure all employees are adequately protected by workman’s compensation insurance, as this has been deemed a significant need by the state. Under California’s Labor Code section 3700, it has become mandatory for all employers to cover all employees for work-related injuries by workman’s comp. Steep financial penalties have been set in place to enforce this public policy. If you are a small California business or corporation, understanding worker’s compensation laws is critical to maintaining your business and its success. As lawyers in Orange County, we break down the basics of the law and what it means for your company.
Even Small Businesses Need to Supply Workman’s Compensation for Every Employee
Worker’s compensation insurance must be purchased by every company in California if they have employees—if you have no employees, you are exempt. So, let’s say you are a sole proprietor, you don’t have to get it for yourself. Even if two partners run your small business, you don’t have to get it for yourselves. But if you have employees, even a half of an employee (half meaning a part-time employee) you now fall into the requirements to get worker’s compensation.
Your Industry Determines the Cost of Insurance
Unfortunately, due to the nature of insurance worker’s comp rates are not the same for every business. Insurance companies always want to try to underwrite the risk. They try to figure out what’s the likelihood that people working in this industry are going to get hurt and they set their rates accordingly. This insurance practice takes particular impact for industries where people tend to get hurt: if you’re in the moving business—it impacts you; if you are in the meat-packing business—it impacts you; if you’re in the construction business—it impacts you.
The problem—for injury-prone industries, the cost of insurance is not cheap! In many cases, the cost of the insurance mandated by the state is enough to determine whether these types of companies will sink or float. So, as a small business owner, you need to be familiar with any changes to the law and consult with someone who will know what is the best solution for your business legally.
How to Afford Insurance as a Small Business
Dishonesty is never the solution to handling state laws, and the penalties are stark for those who do. However, as a family business with one or two family members who are employees, the cost of insurance could determine the fate of your business. The Division of Worker’s Compensation in California realized there are unique situations and have ascertained there are some exemptions to the law. Consulting with a lawyer who understands the rules can help you determine if any of your employees can be legally exempt.
So who is exempt from worker’s compensation insurance in California?
The answer to this question is going to be changing soon. We created a whole page just to walk you through the law changes so you can better understand how to protect your business from steep fines while making the best decisions in regards to workman’s comp for your company.
Read about the workman’s comp law changes to find out how they’ll affect you!
Workman’s Compensation: Lawyers in Orange County that Handle Your Corporate Records
Changes to the worker’s compensation insurance could mean changes you need to make with your corporate records. Documenting these changes through that paperwork protects your company and puts you in compliance with California law in case of an audit. Unlike most Orange County lawyers, we care about protecting you and your business before a lawsuit even becomes a thought. Don’t wait until you are caught with missing documents, contact us before the litigation at Incorporation Attorney. Review your corporate records with us and make sure you are adequately covered and protected now.