Welcome to the Workyard Guide to Workers' Compensation for Construction Companies in California. Under California Labor Code Section 3700, all businesses with one or more employees, must carry workers’ compensation coverage. So workers’ compensation in California is not a matter of if but rather how you will set up your coverage.
Here is what we'll cover:
Everyone knows that construction is inherently risky, but let’s look at some data. According to the US Bureau of Labor Statistics Survey of Occupational Injuries and Illnesses Data, here are the average incidence rates of total cases of nonfatal occupational injuries in the construction industry in 2018:
As you can see, smaller construction companies are particularly risky and risk level can vary by company size. But we also know that some trades are more risky than others.
Framing contractors (NAICS 238130)
Plumbing, heating, and air-conditioning contractors (NAICS 238220)
Electrical contractors and other wiring installation contractors (NAICS 238210)
Regardless of what trade your company operates in, having workers’ compensation coverage is the law. That being said if you operate in a safer trade, you are more likely to pay less for workers' comp.
Companies carry workers’ compensation benefits to cover medical expenses if a worker gets injured on the job. This injury could be caused by a single event or repeated events/exposures.Aside from medical expenses, other potential benefits for injured workers covered by workers’ compensation insurance are temporary disability benefits, permanent disability benefits, supplemental job displacement benefit and death benefits. (Source: DIR)Only workplace injuries that arise out of and in the normal course of business are compensable (Source: WCIRB). There are circumstances which can preclude a worker from receiving workers compensation benefits such as violating workplace safety rules. When workplace injuries occur and claims arise, it’s important to follow the process given to you by your insurance company.
Cost for workers’ compensation can vary widely, mainly depending on how risky the jobs of your employees are. Each occupation is assigned a risk classification based on two factors: frequency of injury and likelihood of severe injuries.Other pricing factors include:
Since California has a no-fault workers’ compensation system, employers are protected from being sued by injured employees. In return, employees don’t have to prove that their employer was at fault for the injury–just that the injury was work-related (Source: Nolo). In fact, it is for this very reason that the CA workers’ compensation was originally established, according to the California Applicants’ Attorneys Association (CAAA).
As a business, you have three options for obtaining workers compensation insurance. An insurance broker can assist you with purchasing the workers’ compensation plan that is best for your business.
The penalties for not carrying workers’ compensation in California are very serious and can include jail time in California.
Basically, there is no world in which it’s worth it to operate a business with employees in California and not carry workers’ compensation insurance. The penalties are extremely steep and failure to comply can put your business reputation at risk.
According to the WCIRB, “The primary purpose of the classification system is to facilitate the accurate collection of data so that the cost of workers' compensation insurance can be distributed as equitably as possible.”
Each trade and sometimes subset of trade, for example framing vs trim/finish carpentry has a classification code which determines how much workers’ compensation will cost for that worker.As expected riskier trades have more expensive insurance rates. Since it is possible for a company to employ workers who will work under different class codes, a company may have multiple of them. It is important to use the correct code for each worker as failure to do so is considered fraud and can seriously complicate the workers’ compensation claims process if an injury arises.
If one of your employees is injured on the job, it’s important to remain calm and follow a pre-established protocol. This means you should have a pre-established protocol for handling worker injuries (both emergency and non-emergency) and have a very specific direction from your insurance provider for how to file a claim. Proper documentation and swiftness are very important for workers’ compensation claims.If a worker is injured and needs emergency care, call 911 or go to the emergency room right away. If emergency treatment is not required, make sure first aid is given and the worker sees a doctor if necessary.In general, this is how the process will go:
Throughout the process, it’s important to stay in close communication with the injured worker, medical provider, and insurance company. Save all messages and documentation.
Labor Code section 132a prohibits employers from discriminating or retaliating against an employee who has sustained a workplace injury or filed a claim for workers’ compensation benefits (Source: Klinedinst). According to the State Fund’s interpretation of the Labor Code, it is illegal to fire or punish an employee because they:
Workers’ compensation in California is not simple other than the fact that you know you need it. If you’re a construction or field services company with questions about workers’ comp and human resources compliance, please reach out by clicking the 'request pricing' button below. At Workyard, we specialize in construction hiring and workforce management — helping companies of all sizes to save money and remain compliant.
The coronavirus pandemic hit hardest on sectors that can not perform remotely, including construction. Unfortunately, many construction workers lost their jobs during this situation. "We have been extremely busy just helping people staff up their projects and get back to work as quickly as possible," said Nicolas De Bonis, CEO of Workyard.
Join our career platform for skilled trades.
Apply for jobs with great local employers in minutes.