Who Can Be Excluded From Workers’ Compensation in California? 2024

Jun 03, 2023 | Workers Compensation

The workers’ compensation system in California provides essential protections to the vast majority of people working in the state. Workers’ comp is designed to provide financial benefits to any employees who sustain injuries or illnesses while performing their job duties.

Workers’ compensation functions as a special sort of insurance policy that employers must take out for every employee. Like any other insurance program, funds are paid into it on a regular basis, with the amount paid depending on how many employees are being covered and other factors. When an employee gets injured, these funds are paid out directly to the employee to go towards covering their medical expenses and lost wages.

While participation in the workers’ compensation insurance system is mandatory for basically all California employers, there are some exceptions to the program. While it is meant to be a comprehensive and highly accessible system, not every working Californian is actually covered by the workers’ compensation system.

Exclusions From California Workers’ Compensation Insurance Coverage

There are several different exclusions to California’s mostly mandatory workers’ comp system, and there is a certain unique logic behind each exception. Some exemptions to workers’ comp include:

• Sole Proprietors – A sole proprietor is someone who runs their own small business and has no regular employees working for them. Many sole proprietors with extremely small operations may even run their businesses under their own legal name, using their social security number instead of a tax ID. This sort of ultra-small business is one of the exceptions to the workers’ compensation program.
• Partnerships – A business partnership (often formed as an LLP in terms of the type of legal entity it operates as) is a business where (usually) two parties go into business together but do not have employees working under them. A common example would be a semi-retired married couple running their own small retail outlet with limited hours. Like sole proprietorships, partnerships are not required to carry workers’ compensation insurance for themselves, although they do have the option to voluntarily participate in the system. This allows them to be covered by the same benefits as a regular employee if they should be hurt or get sick while working for themselves.
• Family Members – A step beyond a mom-and-pop partnership is a family business. These businesses are a part of the backbone of small-town America, and many operate on small margins. Qualifying immediate family members–parents, children, siblings, spouses–can be exempt from workers’ compensation coverage when working for a family-owned and operated endeavor.
• Some High-Level Corporate Decision-Makers – While high-level management and executive roles are typically considered “normal” employees like any others in the eyes of the law, certain corporate directors and officers can be exempted from workers’ compensation if they meet certain requirements. These are outlined in Section 3351 of the California Labor Code, which defines what exactly an “employee” is under the workers’ comp law.
• Independent Contractors – All sorts of independent contractors, such as app-based delivery drivers, freelance illustrators, and consultants, are a well-known exemption to the workers’ compensation law. Only regular employees, and not contractors, need to have workers’ comp insurance coverage. One important thing to note here is that it is illegal for an employer to deliberately misclassify their employees as contractors to avoid paying into the workers’ compensation system.
• Volunteers – Those who perform labor or other services for a nonprofit entity also don’t get coverage through the workers’ comp system. While volunteers are a crucial part of our society, they are, by definition, engaging in work voluntarily and not transactionally, making them legally distinct from workers.
• Casual Domestic Workers – If you occasionally hire a babysitter, maid, or dog walker, you most likely do not need to carry workers’ compensation insurance for them. Any such worker must fall under the legally established thresholds for time worked and pay received, however.
• Certain Salespersons – Certain, specific types of sales jobs, such as real estate agents, are also exempt from workers’ compensation coverage in California.
• Certain Agricultural Workers – Some of the most important (and sometimes contentious) exemptions to the workers’ compensation law are those for agricultural workers. This part of the code is relatively complex. It spells out specific requirements for exemptions that have to do with the type of work being performed, the number of hours worked, the nature of the agricultural operation, the total number of employees, and other factors.
• Uncommon Exemptions – Other, less common, exemptions also exist. For example, high-value pro athletes, who are highly susceptible to injury due to the nature of their work, are excluded from the normal, state-mandated workers’ compensation system.

FAQs About California Workers’ Compensation Laws

Who Is Exempt From Workers’ Comp in California?

There are several different types of jobs that may be excluded from workers’ comp in California. These exemptions exist for any number of reasons and include:

• Corporate directors
• Small family businesses
• Independent contractors
• Pro athletes

For more specific information about exempt roles, it is recommended that you consult a workers’ compensation attorney.

What Employees Are Generally Excluded From the Coverage of a Workers’ Compensation System?

In California, it is typically mandatory for all regular employees to have workers’ compensation coverage, whether they are:

• Full-time
• Part-time
• Salaried
• Hourly
• Seasonal

The most common exemption would be workers classified as independent contractors rather than regular employees. However, it is vital that employers avoid misclassifying their employees as independent contractors, as they can be penalized for violating California’s labor laws.

What Wages Are Excluded From Workers’ Comp in California?

The type of wages that a worker earns does not exempt them from coverage by California’s workers’ compensation system. Part-time and temporary employees are not excluded from workers’ comp benefits as long as they are employed by the company and are not independent contractors. A workers’ compensation attorney can help you if an employer is denying you the coverage you deserve under workers’ comp.

Do You Need Workers’ Comp for Family Members in California?

No, a family-owned and operated business in California can often get exemptions for employees who are family members. These must be qualifying family members, however, which usually means only immediate relatives like spouses, children, and siblings. Consulting an Encino, CA, Workers’ Compensation Lawyer can help you determine whether your situation qualifies for these exemptions.

Barry Law Group: Your Trusted Encino, CA, Workers’ Compensation Lawyers

Whether you’re a small business operator, a corporate executive, or just a working person trying to protect your rights, it’s important to understand the exemptions to California’s powerful workers’ compensation system.

If you have additional questions about workers’ compensation exemptions in California, or if you believe that an employer is trying to misclassify you as a contractor to avoid paying the workers’ compensation benefits you are entitled to, contact Barry Law Group for a no-pressure consultation. We have a record of success standing up for the working people of Encino and beyond.