The curriculum at the college, high school, and trade school levels follows the same common sense progression. You start with a class that discusses the basics of a subject, such as Accounting 101, before you move on to more advanced courses.
To learn about worker’s compensation in California, you should go with the same approach that your schools took with presenting curriculum. To understand the more complex parts of California workers’ comp laws, you first have to learn the basics.
Welcome to Workers’ Comp 101: The Basics of Wormers’ Compensation in California.
Overview or Workers’ Compensation in California
Employers purchase workers’ comp insurance to compensate employees for work-related injuries. Like many states, California operates a no-fault workers’ comp system that benefits both employees and employers. Employees do not have to prove liability when they get hurt on the job, while employers do not have to worry about being sued.
Paid for by contributions made by California employers, the state workers’ compensation program provides several benefits for employees. Workers that qualify for payments to cover the costs associated with a workplace injury can take care of medical bills, as well as have at least partial income to make up for lost wages.
Mandatory Employer Contributions
According to California Labor Code Section 3700, All California private-sector employers must buy workers’ compensation insurance. If a business has one or more employees, the business is legally responsible for purchasing insurance that pays for work-related injuries.
Although the one-employee rule covers virtually every type of business, sole proprietors do not have to purchase insurance to cover the costs of the expenses associated with a work-related injury. However, the owner of a proprietorship can purchase workers’ compensation insurance if the proprietor adds the coverage to a policy. Many proprietors opt for taking out health insurance to cover medical bills.
Unless a corporation is 100 percent owned by directors and executive officers, the directors and executive officers of the corporation must be covered by workers’ compensation insurance.
Purchasing Worker’s Comp Insurance
Employers operating in California must buy workers comp insurance from either a state-licensed insurance company or by going through the State Compensation Insurance Fund (State Fund). California employers also have the option to self-insure to pay for work-related injuries.
If you represent an employer that wants to buy insurance to cover the costs associated with injuries in the workplace, a commercial agent or broker can help you purchase workers’ compensation insurance from a state-licensed insurance company. A commercial agent or broker can also provide you with information on the State Fund and the process for self-insuring your business for work-related injuries.
State Fund represents a California-run entity that facilitates workers’ compensation insurance purchases on a not-for-profit basis. The state-run entity competes with private companies that offer workers’ compensation insurance for California businesses. State Fund is the insurance source of last resort for businesses that cannot purchase workers’ comp policies in the private insurance marketplace.
Self-Insuring for Workers’ Compensation
Self-insurance to cover workplace injuries requires approval by the State of California. Employers that want to self-insure in the state must generate a net income of at least $500,00 a year, with a net worth exceeding $5 million. The requirements for self-insurance in California used to mean only large companies could finance their own workers’ compensation programs. Over the last 10 years, smaller employers from the same industry have pooled their workers’ compensation liabilities to self-insure their respective businesses.
The Cost of Buying Workers’ Compensation Insurance
The State of California does not regulate the premium rates established by insurance companies to cover the costs associated with work-related injuries. Although the Workers’ Compensation Insurance Rating Bureau recommends rates and insurance companies must submit their premium rates to the California Department of Insurance, rates vary among the insurance companies that provide workers’ compensation insurance. Employers should treat purchasing workers’ comp insurance lie they approach buying other types of insurance products.
Here are a few factors to consider before buying insurance for workplace injuries:
- Cost
- Services offered
- Ease of communication with claim adjusters.
- Familiarity with your type of business
- Number of options for physicians in a network
Calculating Premiums
Insurance carriers calculate workers’ compensation insurance premiums by considering several factors. An employer’s record of work-related injuries plays a significant role in determining premium rates. The industry classification assigned to an employer is an important factor in calculating monthly premiums as well. Employer payroll and any special underwriting changes also play a role in calculating what an employer can expect to pay for covering the costs associated with workplace injuries.
If you represent a California employer that wants to buy workers’ compensation insurance, schedule a free case evaluation with a state-licensed employment attorney.
