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Small Business Resource Center


What is Workers' Compensation

Workers' compensation provides benefits to employees who are injured or become ill during the course of or due to employment.

In California, every employer is required to carry insurance to cover the cost of occupational injuries and illnesses. This insurance requirement is mandatory even if you have only one part-time employee. Companies based out-of-state with employees hired in California must also have California workers' compensation insurance.

When is Workers' Compensation Insurance Required

State law requires that business owners have workers’ compensation insurance for most situations where they pay or otherwise compensate employees for their work.

Determining who is an employee, however, can be challenging. Some employers might feel that the person they have hired for a task is an independent contractor, and that no coverage is needed for that person.

Several factors are considered in determining who is an employee and who is an independent contractor. For help in making this determination, please contact a State Fund representative for further details.

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