CA Contractor Workers' Comp: SB 216 Complete Guide

If you hire an uninsured subcontractor and their worker gets hurt on your jobsite, you're writing the check. Under California Labor Code 2750.5, GCs can be held liable for a sub's workers' comp claims. And starting January 1, 2028, every contractor must carry coverage—even with zero employees. Here's what you need to know about SB 216, SB 1455, exemptions, costs, and the penalties that can reach $100,000.

What California Law Requires

California Labor Code Section 3700 requires every employer to secure payment of workers' compensation benefits for employees. Employers may comply by:

Obtaining workers' compensation insurance from an authorized insurer
Obtaining a certificate of consent to self-insure from the Director of Industrial Relations (DIR)

CSLB Enforcement

For CSLB-licensed contractors, the requirement is enforced at the licensing level. To maintain an active license, contractors must provide one of:

A valid Certificate of Workers' Compensation Insurance (COI)
A valid Certification of Self-Insurance from DIR
A signed exemption form (Form 13L-50) certifying they have no employees

All certificates must include the license number and list CSLB as the Certificate Holder. Insurance must be written by a company licensed through the California Department of Insurance.

For more information on license requirements, see our California Contractor FAQ.

SB 216 and SB 1455 Explained

Two recent bills have changed workers' compensation requirements for California contractors. Understanding the timeline is critical for compliance.

What SB 216 Changed (2022)

Senate Bill 216, signed by Governor Newsom in fall 2022, established a universal workers' compensation requirement for all licensed contractors—regardless of whether they have employees. The law was designed to close a loophole where contractors falsely claimed exemption status.

According to CSLB data, as many as 60% of licensed contractors claiming exemption actually had employees, violating existing law. SB 216 addressed this by requiring proof of coverage for everyone.

What SB 1455 Changed (2024)

Senate Bill 1455, passed during the 2023-2024 legislative session, postponed the universal coverage deadline from January 1, 2026 to January 1, 2028. This gave contractors more time to comply and CSLB more time to build verification systems.

SB 1455 also requires CSLB to establish an exemption verification process by January 1, 2027 to audit contractors claiming exemption status.

Key Dates Timeline

Date	Requirement
July 2023	Phase 1: C-8, C-20, C-22, C-39, D-49 must have coverage
July 2026	SB 291 enhanced penalties take effect ($10K-$20K minimums)
Jan 2027	CSLB exemption verification system goes live
Jan 2028	All contractors must have coverage or valid exemption

Classifications That Cannot File Exemption

Certain license classifications require workers' compensation coverage regardless of employee status. These are considered high-risk trades due to injury statistics:

Code	Classification	Effective
C-8	Concrete	July 2023
C-20	Warm-Air Heating, Ventilating and Air-Conditioning (HVAC)	July 2023
C-22	Asbestos Abatement	July 2023
C-39	Roofing	July 2023
C-61/D-49	Tree Service	July 2023

Contractors holding any of these classifications cannot claim exemption and must maintain workers' compensation insurance or self-insurance certification at all times. This applies even if the contractor has no employees.

For a complete list of license classifications, see our guide to California Contractor License Classifications.

Who Can File an Exemption

Until January 1, 2028, contractors without employees may file an exemption with CSLB using Form 13L-50. After that date, only joint ventures with no employees may claim exemption.

Current Exemption Eligibility (Until 2028)

Sole owners with no employees
Single-member LLCs with no employees
Partnerships where all partners are also licensed contractors

Who Cannot File an Exemption

Any contractor with employees (including Home Improvement Salespersons)
Contractors qualified by a Responsible Managing Employee (RME)
Contractors holding high-risk classifications (C-8, C-20, C-22, C-39, C-61/D-49)

After January 1, 2028

Under SB 216 as modified by SB 1455, the only contractors exempt from workers' compensation requirements after 2028 are those organized as a joint venture with no employees who file a certificate of exemption.

What Happens to Current Exemptions?

If you currently have a valid exemption on file with CSLB, you must obtain workers' compensation coverage before January 1, 2028 (unless you qualify as a joint venture with no employees). Existing exemptions will no longer be valid after this date.

Action required: If your license renewal falls after January 1, 2028, CSLB will require proof of coverage at renewal. Don't wait until the last minute— obtaining quotes and binding coverage can take 2-4 weeks.

Warning: The "Employee" Definition

California's AB 5 (the "gig worker" law based on the Dynamex decision) uses the ABC test to determine who is an employee vs. independent contractor. A contractor who claims to be a "sole prop" but regularly uses the same 1099 workers may actually have employees under California law.

When CSLB's verification system goes live in 2027, contractors claiming exemption while using regular subcontractors face significant audit risk. If you use any workers regularly—even as 1099s—consult with an employment attorney about your classification.

How to File Form 13L-50

To file an exemption certificate:

Download Form 13L-50 from CSLB
Complete the form certifying under penalty of perjury that you have no employees
Submit to CSLB Headquarters
Important: Upon hiring employees, you must obtain coverage immediately (before the employee starts work). You then have 90 days to submit proof of coverage to CSLB—but the coverage itself must be in place from day one.

Workers' Comp Costs for California Contractors

Workers' compensation premiums vary significantly based on classification codes, payroll, and your Experience Modification Rate (EMR).

What Affects Premium Cost

Classification codes: Higher-risk trades pay more
Payroll: Premiums are calculated as a percentage of payroll
EMR: Your claims history affects your rate modifier
Coverage limits: State minimums vs. higher limits

Typical Cost Ranges

Risk Level	Example Trades	Annual Premium Range
Low Risk	Painting, Flooring, Cabinets	$500 - $1,500
Medium Risk	Electrical, Plumbing, HVAC	$1,500 - $3,000
High Risk	Roofing, Concrete, Tree Service	$2,500 - $5,000+

*Ranges are minimum premium estimates for sole proprietors with minimal payroll. With employees, costs scale significantly—a roofer with $150K in payroll may pay $15-20K/year. Get quotes from multiple carriers.

Finding Coverage

If you're having difficulty finding coverage through private insurers—especially for high-risk trades—contact the State Compensation Insurance Fund (SCIF). As California's insurer of last resort, SCIF is required to offer coverage to any eligible employer, regardless of risk profile or claims history.

Ghost Policies Don't Satisfy CSLB Requirements

A "ghost policy" is a workers' comp policy for businesses with no employees and $0 payroll. These policies are commonly used in other states (like Texas) to satisfy proof-of-insurance requirements.

CSLB does not accept ghost policies as proof of compliance. In California, contractors without employees must either:

File an exemption certificate (until 2028)
Obtain standard coverage with minimum premium

If you see a broker advertising "ghost policies" for California contractors, be cautious—this may not be compliant with CSLB requirements.

Penalties for Non-Compliance

Operating without workers' compensation coverage when required is a criminal offense in California. The penalties are severe.

Criminal Penalties

Under Labor Code Section 3700.5:

Fine: Not less than $10,000
Imprisonment: Up to one year in county jail
Or both fine and imprisonment

Civil Penalties

Up to $100,000 against illegally uninsured employers
Penalty assessment equal to the greater of:
- Twice the premium amount during the uninsured period, OR
- $1,500 per employee during the uninsured period

Stop Orders

The Division of Labor Standards Enforcement (DLSE) may issue a stop order prohibiting use of employee labor until coverage is obtained. Violating a stop order is a separate misdemeanor punishable by:

Imprisonment up to 60 days
Fine up to $10,000
Or both

License Suspension

Failure to maintain workers' compensation insurance coverage will result in automatic license suspension. Work performed during suspension is unlicensed activity subject to additional disciplinary action.

SB 291 Enhanced Penalties (Effective July 1, 2026)

Senate Bill 291 increases civil penalties for contractors found to have employed workers without maintaining workers' compensation coverage:

Sole Owners: Minimum $10,000 per violation
Partnerships, Corporations, LLCs: Minimum $20,000 per violation
Subsequent Violations: Up to $30,000 per occurrence

SB 291 also prohibits CSLB from renewing or reinstating the license of a contractor who previously violated WC requirements until they provide current proof of coverage.

GC Liability for Uninsured Subcontractors

If you're a general contractor hiring subcontractors, their workers' comp status directly affects your risk exposure.

Labor Code Section 2750.5

Under California Labor Code Section 2750.5, if a subcontractor's employee is injured and the subcontractor lacks workers' compensation coverage, the hiring contractor may be held liable for workers' compensation benefits.

This means the injured worker can file a claim against your policy—increasing your EMR and future premiums, even though it wasn't your employee.

How to Protect Yourself

Verify before hiring: Check every sub's coverage on CSLB
Require COIs: Get certificates of insurance naming you as additional insured
Monitor expirations: Set calendar reminders for policy renewals
Use contract language: Require subs to maintain coverage throughout the project
Include lapse remedies: Your subcontract should specify that if coverage lapses mid-project, you may immediately suspend work, require cure within 48 hours, or back-charge for coverage costs if you need to add them to your policy

Decision Tree: What If a Sub Shows "Exempt"?

When you check CSLB and see a subcontractor has an exemption on file, here's how to evaluate the risk:

Check their classification. Is it C-8, C-20, C-22, C-39, or D-49? If yes, the exemption is invalid—they cannot be exempt. Do not hire without valid coverage.
Will they have workers on your site? If you see a crew, ask directly: "Are these your employees or 1099 subs?" If they're employees, the exemption is invalid.
Request a signed attestation. Have them confirm in writing they have no employees and understand they must notify you immediately if that changes.
Consider requiring coverage anyway. For high-risk work or larger projects, some GCs require all subs to carry WC regardless of exemption status—it's cleaner from a liability standpoint.
Monitor mid-project. A sub's status can change. If you see new faces on their crew, reverify their coverage status.

Pro tip: If a sub shows "Exempt" but you see them using the same workers repeatedly, they likely have employees under California's ABC test. The exemption may be invalid, and you could inherit liability.

For more on GC liability, see our guide to the Controlling Employer Doctrine and Subcontractor Prequalification Checklist.

How to Verify Contractor Coverage

Before hiring a subcontractor, verify their workers' compensation status on CSLB:

CSLB License Lookup Tool

What the CSLB Record Shows

Insurance company name (if covered)
Policy effective date and expiration
Exemption status (if filed)
Classification codes held

Red Flags to Watch For

Expired coverage: Policy end date has passed
Exemption + workers on site: Claims no employees but has a crew
High-risk classification with exemption: C-8, C-20, C-22, C-39, or D-49 cannot be exempt
RME with exemption: Having an RME means you have an employee

For a complete verification process, see our How to Verify a Contractor Guide.

Frequently Asked Questions

Do California contractors need workers' comp with no employees?

Currently, contractors with no employees can file an exemption—except for high-risk classifications (C-8, C-20, C-22, C-39, D-49). Starting January 1, 2028, all contractors must have coverage unless organized as a joint venture with no employees.

What is SB 216 and when does it take effect?

SB 216 (2022) requires all licensed contractors to carry workers' comp insurance, even without employees. SB 1455 (2024) delayed the deadline from January 2026 to January 2028.

Can I get a ghost policy in California?

No. California does not allow ghost policies (zero-payroll policies). Contractors without employees must file an exemption or obtain standard coverage.

What if my subcontractor doesn't have workers' comp?

Under Labor Code 2750.5, you may be liable for their employees' injuries. Always verify coverage before hiring and require COIs.

How much does workers' comp cost for a sole proprietor?

Costs vary by trade. Low-risk trades may pay $500-1,500/year; high-risk trades like roofing may pay $2,500-5,000+ annually. Get quotes from multiple carriers.

What happens if I operate without coverage?

You face criminal misdemeanor charges (up to $10,000 fine and 1 year jail), civil penalties up to $100,000, stop orders, and automatic license suspension.

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