As an employer in California, you have to be concerned with what happens if an employee gets injured on the job. The California Department of Insurance notes that all employers must have workers’ compensation insurance. It does not matter if you have only one employee or you have 200 employees, you are legally required to carry the insurance. Trouble starts if you do not have it.
Because carrying coverage is required under the California Labor Code, if you do not have coverage, you are in violation of the law. It is categorized as a misdemeanor. Your business can be closed down, or you can be fined by the Division of Labor Standards Enforcement. Since it is a criminal offense, you may also face up to one year in jail and/or a fine of up to $10,000. The state may also fine you a maximum of $100,000. It is also important to note that the Uninsured Employers' Benefit Trust Fund has the right to file charges against you for fraud if you willfully do not carry insurance coverage.
Even worse than all the fines, possible jail time and having your business closed, you also become liable for any injuries that your employees may suffer while at work. You can be sued for medical bills, lost wages and other expenses associated with any accidents. Even one seemingly small accident can lead to extreme expenses that you will likely end up being ordered to pay. This is for informational purposes only and not intended as legal advice.