In California, workers’ comp isn’t something a business can opt out of for its employees. What the law does is define who isn’t an employee: certain household workers hired by family or for very short jobs, unpaid volunteers for nonprofits and public agencies, and a few narrow groups like volunteer ski patrol. Separately, some owners can waive coverage for themselves in writing, including corporate officers who own enough stock, general partners and LLC managing members. A sole-shareholder officer is excluded unless the corporation chooses coverage. Licensed contractors have extra CSLB rules, and starting January 1, 2028, every active contractor license needs workers’ comp on file, with a narrow joint-venture exception.
Start with who counts as an employee
California’s default is broad. Under Labor Code 3357, anyone doing work for someone else is presumed to be an employee unless they are an independent contractor or the code expressly excludes them. Section 3351 spells out that this includes officers and directors who work for the corporation for pay, working partners and LLC members who receive wages regardless of profits, and people the owner or occupant of a home hires for work around the home, including child care.
Every employer other than the state has to secure workers’ comp for its employees under Labor Code 3700, either through an insurer or a state certificate to self-insure. So the useful question isn’t who is exempt from buying it. It’s which people the law doesn’t treat as employees, and which owners can opt themselves out.
People the statute excludes
Labor Code 3352 lists people who are not employees for workers’ comp purposes. The ones business owners and households ask me about most:
- Household workers hired by family. Someone doing household work who is employed by their own parent, spouse or child. The exclusion is limited to household work; it says nothing about family members working in your business.
- Very short household jobs. A household worker whose employment by that household in the 90 days before the injury was, or was contracted to be, for less than 52 hours, or for wages of $100 or less.
- Unpaid volunteers. People volunteering for a public agency or a private nonprofit who receive nothing beyond meals, transportation, lodging or reimbursement for incidental expenses.
- Aid in exchange for work. People working only for aid or sustenance from a religious, charitable or relief organization.
- Narrow groups. Volunteer ski patrollers, unpaid sports participants who aren’t regular employees, certain amateur sports officials, and owner-builders in nonprofit mutual self-help housing programs.
Owners who can waive coverage for themselves
Some owners can elect out of coverage, but only for themselves and only by signing a written waiver under penalty of perjury:
- Corporate officers and directors who own at least 10 percent of the stock, or at least 1 percent if a parent, grandparent, sibling, spouse or child owns 10 percent or more and the officer has health coverage.
- General partners and LLC managing members.
- Owner-practitioners of a professional corporation who state they have health coverage, and officers or directors of a cooperative corporation who state they have both health coverage and a disability insurance policy.
For officers, directors, general partners, LLC managing members and professional-corporation owners, the waiver takes effect when the business’s workers’ comp carrier receives and accepts it, can be backdated up to 15 days with the signer’s consent, and stays in place until the signer withdraws it in writing. The law conclusively presumes that a person who signs one is not covered. An officer or director who is the sole shareholder of a private corporation is excluded without a waiver, unless the corporation elects coverage, which buying a policy that covers that person does under Labor Code 4151.
What no employer can opt out of
A waiver covers the owner who signs it, never the staff. Labor Code 5000 says no contract, rule or regulation exempts an employer from liability for workers’ comp benefits. Part-time and short-term hires outside the household exclusions are still employees (part-time employees in California), and since July 1, 2020, anyone who is an employee under the Labor Code 2775 ABC test counts too (1099 contractors and workers’ comp). A sole proprietor or partnership with nobody on payroll is a separate question, covered in workers’ comp with no employees.
What happens if you should have it and don’t
- Stop order. The state issues a stop order barring the use of employee labor until coverage is in place, effective on service, and the employer pays affected employees for up to 10 days of lost time (Labor Code 3710.1). DWC says ignoring a stop order is itself a misdemeanor.
- Penalty assessment. $1,500 per employee employed when the stop order is issued, or, if the employer was uninsured for more than a week during the calendar year before the determination, the greater of twice the premium it would have paid or $1,500 per employee employed while uninsured (Labor Code 3722).
- Criminal charge. Failing to carry it when you knew, or should have known, you had to is a misdemeanor punishable by up to one year in county jail, a fine of up to double the premium that would have been due but not less than $10,000, or both (Labor Code 3700.5).
Licensed contractors play by CSLB rules
For contractors, the CSLB adds its own requirement. Business and Professions Code 7125 makes a workers’ comp certificate or an exemption on file with CSLB a condition of keeping a license. The no-employee exemption is not available to C-8 concrete, C-20 HVAC, C-22 asbestos abatement, C-39 roofing or C-61/D-49 tree service licenses; they must carry coverage whether or not they have employees. SB 216 (2022) extends the requirement to every licensee regardless of classification or employees, and SB 1455 (2024) moved that start date from January 1, 2026 to January 1, 2028. From then on, the only exemption left is for a joint venture with no employees, and an inactive license needs no certificate. What the 2028 rule means, check whether it applies to you, and contractor insurance. For the policy itself, see workers’ compensation insurance.
Common questions
Can I sign a waiver so I don’t have to cover my employees?
No. Owner waivers apply only to the person who signs them, and Labor Code 5000 says no contract or rule exempts an employer from liability for its employees’ benefits.
Do corporate officers have to be covered?
Officers and directors who work for the corporation for pay are employees by default. One who owns at least 10 percent of the stock can waive coverage for themselves in writing, and a sole-shareholder officer of a private corporation is excluded unless the corporation elects coverage.
Is a family member who works for me exempt?
Only in a narrow case: a person doing household work who is employed by their parent, spouse or child. The statute doesn’t exclude relatives who work in your business.
Are volunteers exempt?
Unpaid volunteers for a public agency or private nonprofit are excluded if they receive nothing beyond meals, transportation, lodging or reimbursement for incidental expenses.
Can a roofer claim the no-employee exemption with CSLB?
No. C-39 roofing, along with C-8, C-20, C-22 and C-61/D-49 licenses, must have workers’ comp on file whether or not there are employees. Starting January 1, 2028, that applies to every active license except a joint venture with no employees.
Sources
- California Labor Code 3351: definition of employee
- California Labor Code 3352: exclusions and owner waivers
- California Labor Code 3357: presumption of employment
- California Labor Code 2775: ABC test for employee status
- California Labor Code 3700: duty to secure compensation
- California Labor Code 3700.5: misdemeanor for failing to insure
- California Labor Code 3710.1: stop orders
- California Labor Code 3722: penalty assessments
- California Labor Code 4151: employer election of coverage
- California Department of Insurance: Notice to insurers on SB 189 changes to employee exclusions and waivers (effective Jan. 1 and July 1, 2018)
- California Labor Code 5000: no contract exempts the employer
- DIR Division of Workers’ Compensation: employer FAQs
- CSLB: Workers’ compensation requirements
- CSLB: Business and Professions Code 7125
- SB 216 (Chapter 978, Statutes of 2022), California Legislative Information
- SB 1455 (Chapter 485, Statutes of 2024), chaptered text
- CSLB workers’ compensation stakeholder meeting packet, November 2024
- CSLB: Senate Bill 291 (Chapter 455, Statutes of 2025) workers’ compensation exemption report to the Legislature, March 2026
General information about California workers’ compensation exclusions and waivers as of October 2026, not legal or tax advice; the California Labor Code, the Business and Professions Code and DIR and CSLB rules control. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.