Workers’ comp certificates for California contractors: what CSLB requires, who is still exempt, and what changes in 2028

Every active California contractor’s licence has a workers’ compensation record behind it: a certificate of insurance, a certificate of self-insurance, or a signed statement that the licensee has no employees. The rules about which of those you can file have been tightening for a decade, they tighten again on 1 January 2028, and the penalties for getting them wrong went up on 1 January 2026. This page sets out what the Contractors State License Board (CSLB) requires, what has to be on the certificate for CSLB to accept it, and what happens when a policy lapses.

This page is about California only. Contractor licensing and workers’ compensation are state matters. Everything below comes from California’s Business and Professions Code, its Labor Code and the Contractors State License Board, and none of it applies to a contractor licensed in another state.

Does a California contractor need workers’ comp with no employees?

It depends on the licence classification, and only until the end of 2027. Business and Professions Code section 7125 requires every licensee to have one of three things on file with CSLB. The first is a certificate of workers’ compensation insurance from an insurer licensed in California. The second is a certificate of self-insurance from the Department of Industrial Relations. The third is an exemption statement certifying that the licensee has no employees.

Five classifications cannot use the exemption at all and must carry coverage whether or not they have employees. They are C-8 concrete, C-20 warm-air heating, ventilating and air conditioning, C-22 asbestos abatement, C-39 roofing, and D-49 tree service, which CSLB lists as C-61/D-49. Everyone else may still file the exemption if it is true. Once there is a single employee, Labor Code section 3700 requires coverage regardless of classification.

What changes on 1 January 2028?

The exemption ends for nearly everyone. SB 1455, signed in 2024, moved the date from 2026 to 2028, which is why so many pages still say 2026. From 1 January 2028 the only licensee that can file an exemption is a joint venture with no employees. Every other licensee, in every classification, will need a workers’ compensation policy or a self-insurance certificate on file to hold an active licence.

A second law arrived first. SB 291, in force since 1 January 2026, set minimum penalties for a false exemption (covered below). It also requires CSLB to design a process for verifying exemption claims and report it to the Legislature by 1 January 2027. CSLB approved its proposal in March 2026; it includes auditing a share of exemption claims each year, a business-plan showing for each exemption, and a fee to fund the work. If you hold an exemption today, expect to be asked to prove it before 2028 arrives.

What has to be on the certificate for CSLB to accept it?

CSLB rejects certificates for small omissions, and a rejected certificate is the same as no certificate. Its requirements are specific:

• Your business name exactly as it appears on the licence record, not a trade name or an abbreviation.
• Your licence number, or the application fee number if the licence has not been issued yet, in the description of operations. A certificate without it is not processed.
• The insurer’s full legal name as licensed with the California Department of Insurance, not the group or parent name, and the insurer must be on CSLB’s list of approved carriers.
• The policy number, the effective date and the expiration date.
• CSLB as the certificate holder, at P.O. Box 26000, Sacramento, CA 95826.
• The signature of an authorized representative of the insurer or its agent. A stamp is accepted; a typed name is not.
• An issue date within the last 90 days.

The document itself is the standard ACORD 25 certificate of liability insurance, with the workers’ compensation line completed. What a certificate proves and does not prove is covered in certificate of insurance in California.

Who files the certificate, and how do you know it arrived?

The insurer or its agent does. CSLB’s online filing system is for insurers licensed to write workers’ compensation in California and their authorized agents; contractors are told not to use it. A contractor can mail a paper certificate instead, but the usual route is that the agency that placed the policy files it. State Fund says it sends proof of coverage to CSLB automatically when a contractor policy is issued. For our contractor policyholders we typically handle the CSLB filing as part of servicing the policy, at issue and at each renewal.

Check that it landed. CSLB’s public licence check shows the workers’ compensation record on your licence, including the insurer and the policy dates. Look at it after every renewal and after any change of carrier, because a policy that renewed with the carrier is not the same as a certificate that reached Sacramento.

What is the 90-day rule?

Two different 90-day rules, and both matter. First, when you hire your first employee, CSLB expects proof of coverage within 90 days of the hire. Second, under section 7125.1, a certificate that reaches CSLB within 90 days of its own effective date is accepted as of that date, and a licence suspended in the meantime is reinstated retroactively. After 90 days, the registrar accepts the earlier date only if you show the delay was outside your control. A certificate filed late is the most common reason a licence shows a suspension that the contractor never knew about.

What happens if the policy lapses?

The licence is suspended by operation of law. Under section 7125.2 the suspension takes effect on the day coverage lapsed, or the day coverage became required, whichever came first. CSLB posts a pending suspension to the licence record for up to 45 days beforehand and sends written notice, and the licence is reinstated as soon as proof of current coverage is filed. Because the suspension is retroactive to the lapse, the gap on the record is real even if it is later closed. A suspended licence during a job raises contract and payment questions that belong with a construction attorney.

The penalties changed on 1 January 2026. Under section 7125.4, as amended by SB 291, filing a false exemption or employing workers without coverage now carries a civil penalty of at least $10,000 per violation for a sole owner. For a partnership, corporation, LLC or tribal business the floor is $20,000, and repeat violations can reach $30,000 per occurrence. The qualifying individual on the licence commits a misdemeanor, and CSLB will not renew or reinstate the licence until a valid certificate is on file. That sits on top of the Labor Code. Section 3700.5 makes failing to insure a misdemeanor punishable by up to a year in county jail and a fine of double the premium owed, with a $10,000 minimum. A stop order under section 3722 brings a penalty of $1,500 per employee before any uninsured claim is counted.

Do 1099 workers count as “no employees”?

Usually not, for work that needs a licence. Labor Code section 2750.5 presumes that anyone performing work for which a contractor’s licence is required is an employee, and says that a person without a licence cannot be an independent contractor for that work. So an unlicensed helper paid on a 1099 is, for workers’ compensation purposes, your employee, and an exemption filed while that person is on site is a false exemption. Licensed subcontractors are different, which is why their certificates are collected before the job starts and why carriers generally charge the payroll of any uninsured subcontractor to your policy at audit. How California decides who is an employee is covered in do freelancers need workers’ compensation.

Can an owner exclude themselves from the policy?

Often, yes. Under Labor Code section 3352, an officer or director can be excluded by signing a written waiver under penalty of perjury. The officer must own at least 10 percent of the corporation’s stock, or 1 percent where a close family member owns 10 percent, and must be covered by a health insurance policy. A general partner or a managing member of an LLC can be excluded by the same kind of waiver. The 10 percent threshold has applied since SB 189 took effect in July 2018. A sole proprietor is not an employee of their own business and is not covered unless they elect to be.

Two consequences follow. A policy with every owner excluded and no payroll is a minimum-premium policy, sometimes called a ghost policy. It satisfies a general contractor who wants a certificate, and it satisfies CSLB for the five classifications that must carry coverage. But it covers nobody, and it is audited at the end of the year like any other policy. And an owner who does the physical work and is excluded has no workers’ compensation benefits if hurt on site, which is the trade-off to weigh before signing the waiver.

What if a general contractor wants a waiver of subrogation and you are exempt?

You cannot endorse a policy you do not have, so the request usually forces the decision above. With a policy in place, the California waiver is endorsement WC 04 03 06. It is written for the parties named on it or for everyone you have a written contract with, and carriers charge for it, typically as a percentage of the premium. Ask for the endorsement to be added before the certificate is issued, because a note in the certificate’s description box does not create a waiver. The same is true of the additional insured wording general contractors ask for on the liability side; the mechanics are in what insurance contractors need.

Why is roofing treated differently?

Roofing has been in the must-carry group far longer than the other four classifications. Its requirement was made permanent in 2012, eleven years before concrete, HVAC, asbestos abatement and tree service joined in July 2023. California also treats roofing policies differently in one more way, and this one is specific to C-39. Under Insurance Code section 11665 the insurer must perform an annual payroll audit that includes an in-person visit to the business, and may charge for it. Other contractors’ policies are audited under the carrier’s ordinary rules, which for smaller policies often means a mail or phone audit. A C-39 licensee who works alone still needs a policy on file with CSLB, and the premium is driven by the class code, the payroll and the experience record rather than by headcount. If you hold C-39 alongside other classifications, the roofing rule applies to the whole licence.

How do you get a workers’ comp certificate from us?

Most certificates we issue ourselves from the policy. A few carriers issue their own, and when that applies we tell you and request it for you. In both cases the certificate has to come from the agency or carrier that holds the policy.

Already a client of ours?

Use the certificate request form and tell us who the certificate is for. If it is for CSLB, say so and we file it. If it is for a general contractor who wants a waiver of subrogation, send the contract clause, because the endorsement has to be added first.

Not yet a client?

Start with a contractors insurance quote and tell us your classifications and whether you have employees. Some contractor risks we can write directly and quickly. Others go to underwriting for approval, or need a wholesale market, and those take longer. Either way you know before you decide, and the CSLB filing is part of the policy once it is placed.

This is general information about a California licensing requirement and is not legal advice. Whether an exemption is available for a particular licence on a particular day is a question for CSLB’s published rules. A suspension already on a licence record is a matter for a construction attorney as much as for an insurance agent.

Sources

• Business and Professions Code 7125, 7125.1, 7125.2 and 7125.4; SB 1455 (2024); SB 291 (2025)
• Labor Code 2750.5, 3352, 3700, 3700.5 and 3722
• Insurance Code 11665 (roofing payroll audits)
• Contractors State License Board, workers’ compensation requirements and Industry Bulletin 24-07 on SB 1455
• State Compensation Insurance Fund, what you need to know about SB 216

Disclaimer

This article is provided by Schneiderman Insurance Agency for general informational purposes only. It is not legal, tax, financial, claims, or coverage advice. We are licensed insurance professionals, not attorneys, accountants, or financial advisors, and nothing here should be relied on as a substitute for advice from a qualified professional in those fields. This content is general in nature and is not a review of, or a recommendation for, any individual reader’s specific insurance needs, policies, or circumstances. Insurance coverage depends entirely on the specific terms, conditions, endorsements, exclusions, limits, underwriting eligibility, carrier, and facts of each situation, and the actual policy language always controls. We do not guarantee any coverage, pricing, eligibility, underwriting approval, or claim outcome. Reading this article does not create an agent-client relationship. To understand how these issues apply to your situation, please review your own policy and speak with a licensed insurance professional, and consult legal, tax, or financial advisors where appropriate.