Workers’ Comp Requirement Updates with the CSLB

Changes to the workers’ compensation requirements are going to affect all licensed contractors by the start of 2026. Here’s what we know so far and what we recommend doing to prepare for the upcoming changes.

BACKGROUND

On September 30th, 2022, Senate Bill No. 216 was approved. The first section of this bill required that Concrete, HVAC, Asbestos Abatement, and Tree and Palm licensed contractors submit proof to the CSLB that they carried a valid workers’ compensation insurance policy, regardless of whether or not they had employees.

The second section is set to take effect starting January 1st, 2026 and will affect all licensed contractors by requiring everyone to hold a workers’ compensation insurance policy, regardless of whether or not they have employees. This policy will have to be reported to the CSLB to keep the license in “Current and Active” status. 

This does not apply to contractors who are in an inactive status. 

WHY THIS CHANGE

This change is meant to protect workers of the contractors. According to Senator Bill Dodd, there are 230,000 licensed contractors throughout California. And while 55% of contractors claim to not have employees, research conducted by the CSLB shows many of these workers’ exemption claims are false. These false claims unfortunately renders workers hired by contractors vulnerable to a lack of coverage if and when they get injured on the job site.  

Failure to have workers’ compensation insurance warrants more than just a slap on the wrist. It is a criminal offense that could mean jail time, a fine, or both, in addition to having your contractor license suspended until a valid policy is filed with the CSLB. 

WHAT YOU CAN DO NOW

If you do not have a current workers’ compensation insurance policy in place, here are some suggestions to help prepare for the upcoming update: 

Start looking for a local agent to assist you with getting a policy set up. The sooner you are able to shop around for a workers’ compensation policy, the sooner you can be informed with the necessary information you would need to have an active policy in place. Another option is to obtain workers’ compensation through State Fund. 

Always ask your agent whether or not you can take advantage of certain discounts or if they are able to offer other payment options other than paying in full.

If you are planning on hiring W-2 employees, calculate your payroll accurately, as your workers’ compensation premium is based on your payroll and classification rate(s).