Yes, every California employer using employee labor, even including family members, must purchase Workers’ Compensation Insurance (Labor Code Section 3700).

If you do not have Workers’ Compensation Insurance for your employees, it can be expensive as the Division of Labor Standards Enforcement is required to issue a penalty prohibiting further use of employee labor until you do purchase Workers’ Compensation Insurance for your employees.

The penalty for failure to have Workers’ Compensation Insurance is based on the greater of either:

1. Twice the amount the employer would have paid in workers’ compensation insurance premiums during the period the employer was uninsured, or
2. $1,500 per employee.

However, there are exceptions for partnerships. If the only workers performing labor are the partners and corporations where the corporate officers are the sole shareholders, in such a case, the corporation, officers and directors come under the Workers’ Compensation provisions only by election.

David Payab, Esq. from The Law Offices of Payab & Associates can be reached @ (818) 918-5522 or by visiting


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