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Brandon, Esq.
Brandon, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 1952
Experience:  Has received a certificate of recognition from the California State Senate for his outstanding legal service.
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Hi, I am a computer consultant in California. I am sole

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Hi,

I am a computer consultant in California. I am sole owner or s corp, i receive w2 paycheck from corp. I will sign a corp-to-corp contract thru a recruiting company - the recruiting company requires i carry worker compensation insurance ($1 Million). As the sole owner of the company, what purpose would this policy serve, and does the law require i do so? my work is typical office work.

thank you
George

Employment-LawExpert :

Hello and thank you for your question today.

Employment-LawExpert :

Are you online with me?

Employment-LawExpert :

California law requires all employer to have workers compensation insurance if they have even one employee. As you are the owner, then technically, you would not need to carry it even though you are receiving a W2. Coverage for owners is optional, but if you were to ever hire even one employee, then you would need to have it as otherwise you would be both civilly and criminally liable.

Employment-LawExpert :

Failing to have workers' compensation coverage is a criminal offense. Section 3700.5 of the California Labor Code makes it a misdemeanor punishable by either a fine of up to $10,000 or imprisonment in the county jail for up to one year, or both. Additionally, the state issues penalties of up to $100,000 against illegally uninsured employers.

Employment-LawExpert :

Additionally, if an employee gets hurt or sick because of work and you are not insured, you are responsible for paying all bills related to the injury or illness as well as all claims related to a negligence claim. Thus, they would be able to bring both a civil action against you as well as file a workers compensation claim.

Employment-LawExpert :

Finally, if the Division of Labor Standards Enforcement determines that an employer is operating without workers' compensation coverage, a stop order will be issued. This order prohibits the use of employee labor until coverage is obtained, and failure to observe it is a misdemeanor punishable by imprisonment in the county jail for up to 60 days, or by a fine of up to $10,000, or both. The Division of Labor Standards Enforcement will also assess a penalty of $1,000 per employee on the payroll at the time the stop order is issued and served, up to $100,000 (Labor Code section 3722(a)).

Employment-LawExpert :

This is why the recruiting company is requiring you to have workers compensation insurance. While you are the only employee currently, if you were to hire anyone, even on a temporary basis, you could both find yourselves criminally and civilly liable.

Employment-LawExpert :

Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.

If you do not require any further assistance, I would be most grateful if you would remember to provide my service a positive rating, as this is the only way I will receive credit for assisting you.

California law requires all employer to have workers compensation insurance if they have even one employee. As you are the owner, then technically, you would not need to carry it even though you are receiving a W2. Coverage for owners is optional, but if you were to ever hire even one employee, then you would need to have it as otherwise you would be both civilly and criminally liable.


Failing to have workers' compensation coverage is a criminal offense. Section 3700.5 of the California Labor Code makes it a misdemeanor punishable by either a fine of up to $10,000 or imprisonment in the county jail for up to one year, or both. Additionally, the state issues penalties of up to $100,000 against illegally uninsured employers.


Additionally, if an employee gets hurt or sick because of work and you are not insured, you are responsible for paying all bills related to the injury or illness as well as all claims related to a negligence claim. Thus, they would be able to bring both a civil action against you as well as file a workers compensation claim.


Finally, if the Division of Labor Standards Enforcement determines that an employer is operating without workers' compensation coverage, a stop order will be issued. This order prohibits the use of employee labor until coverage is obtained, and failure to observe it is a misdemeanor punishable by imprisonment in the county jail for up to 60 days, or by a fine of up to $10,000, or both. The Division of Labor Standards Enforcement will also assess a penalty of $1,000 per employee on the payroll at the time the stop order is issued and served, up to $100,000 (Labor Code section 3722(a)).


This is why the recruiting company is requiring you to have workers compensation insurance. While you are the only employee currently, if you were to hire anyone, even on a temporary basis, you could both find yourselves criminally and civilly liable.


Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.

If you do not require any further assistance, I would be most grateful if you would remember to provide my service a positive rating, as this is the only way I will receive credit for assisting you.

Brandon, Esq. and other California Employment Law Specialists are ready to help you