What is Workers’ Compensation?

California law requires every employer to have workers’ compensation insurance or become a self-insured, even if the employer has just one employee. Workman compensation coverage is designed to provide benefits to injured workers. Liability for not having coverage can range from a criminal offense and $1,000.00 fine (see California Labor Code Section 3700(2)), to preventing the employer from operating its business until the employer can show proof of actual workmans’ compensation insurance coverage. If an employee is injured on the job when the employer is not covered by workers’ compensation, that employee is paid benefits from the state’s Uninsured Employers Fund. The state will take steps to recoup funds from the Uninsured Employer using the same methods it uses to collect overdue taxes, child support, and student loans. The state can put a lien on the employer’s home, and the employer’s contractor’s license is automatically suspended. The employer’s assets can be attached even if held overseas or in a corporation or trust. In addition, workers can sue the Uninsured Employer for negligence in civil court. Workers’ compensation insurance protects the health and income of workers who get injured on the job. Also limits the employer’s liability for lawsuits, such as meeting your payroll. For example, if an employer can’t afford workers’ compensation insurance, the employer should not be in business.