Workers’ Compensation Guide For California Businesses

Any business in California with employees-even one temporary employee–must offer workers’ compensation to cover the costs of treatment and rehabilitation of work-related injuries. Owners and sole proprietors do not have to have workers’ compensation, though roofers are required to by the California State Licensing Board, even if they don’t have any employees. Employers must pay the cost of workers’ compensation insurance and employees may not be asked to contribute toward the cost of premiums.

Since work comp is basically a standard cost of operating a business, it’s an important budget item for businesses–especially small businesses that may be operating on a tighter budget than larger companies. Just as a good workers’ compensation plan can benefit the financial goals of a business, a bad option or poorly managed plan can have the opposite effect, which is what makes it such an important choice. These are considered the primary benefits that must be covered under employer-sponsored workers’ compensation benefits:

• Medical care
• Temporary disability
• Permanent disability
• Job displacement benefits
• Death benefit

Visit the Division Of Workers’ Compensation Fact Sheet (PDF) to learn more about some of the basics of workers’ compensation requirements and obligations for employers.

How Premiums Are Set & Why The Cost Varies

Even though the workers’ compensation system was designed, in part, to help businesses manage the costs of work related injuries, the cost of premiums can vary between carriers. This can be confusing for businesses that seek competing price quotes from different carriers, only to get drastically different numbers from them.

The way that premiums for workers’ compensation are set in California are based on recommendations from the Workers’ Compensation Ratings Insurance Rating Bureau, which provides research, education and information about workers’ compensation for the state. Since their numbers are a recommendation only, work comp. insurance carriers have some latitude in adjusting the price of their own policies, which results in the price discrepancies between insurers.

One of the benefits of an independent insurance agent is that they help you pick and choose from all the options available and help you figure out why there’s a difference in price. Beyond just covering the injuries for your employees, a good workers’ compensation insurance plan should also provide other services. This includes things like being able to get in touch with the claims adjuster easily, having industry-specific knowledge and even knowing which doctors will be available under a particular plan.

The factors mentioned above all play a role in the final price and ultimate benefit you receive from your workers’ compensation insurance and they should all be taken into account when considering your options. Making an informed decision about your workers’ compensation insurance can have a direct impact on both the long term health of your employees, as well as the financial health of your business–make sure your choice is the right one!

California Workers’ Compensation Resources

National Council On Compensation Insurance (NCCI) – Much like the WCIRB gives recommendations on premiums provides workers’ compensation resources for California, the NCCI does the same on a national level. Essentially, they are a national rating bureau which states without their own entity providing information tend to rely on for their rates information.