I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today.
First, if you do not have an employer state ID, you must get one immediately. The process is easy though. You will need to register with the Employment Development Department (EDD). You can call them toll free at(###) ###-####or visit your nearest Employment Tax Office.
Then you will need to arrange to get workers' compensation insurance for all of your employees---even part time employees so that you are in compliance with state law.
As for the possible legal and civil consequences of not carrying workers compensation coverage, the California Division of Labor Commissioners office determines whether you are in compliance with workers' compensation laws.
Operating without this insurance is a misdemeanor in California, pursuant to California Labor Code section 3700.5. If you are criminally prosecuted, you face fines of up to $10,000 or up to a year in jail, or both.
Presuming this is a first offense, you will likely be only fined.
The best way to avoid a stop employment order by the state is to immediately come into compliance.
California Labor Code section 3722(a) allows the Division of Labor Standards Enforcement will impose a penalty of $1,000 per employee on payroll at the time a stop order is issued and served.
You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.
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I wish you and yours the best in 2015,