Skip to the content

Home > Workers compensation > Two employees · Leer en español

How do you get workers compensation for a two-employee business in California?

Insurance City prepares the workers compensation application when a California business already has two employees on payroll. The Division of Workers’ Compensation says the duty starts with one employee, and Labor Code section 3700 requires every employer except the state to insure or to hold a certificate of consent to self-insure.

Published 2026-10-04 by Insurance City Agency, LLC, CA License #6003045. Reviewed by Santo Militello, California-licensed Property & Casualty agent (CA License #1737723).

Get a Quote (209) 670-1556

The working path is an insurer authorized to write compensation insurance in California. Describe the work the two employees do, estimate the annual payroll for each, and send that packet to the insurer or to a licensed broker. When the policy is issued, post the notice in Labor Code section 3550 and keep a claim form for the one-working-day rule in section 5401. This page does not state a premium. The product overview is on workers compensation insurance. Whether the duty exists at all is on do I need workers compensation in California.

How do you get the policy when two people are already on payroll?

  1. Write down who is an employee. DIR’s employer page says California employers must have workers compensation even with one employee (checked 10/4/2026). Two people on payroll are inside that duty. A licensed contractor with nobody on the payroll uses a different filing, explained on the contractor exemption page. This page is the two-employee case.
  2. Pick a lawful way to secure payment. Labor Code section 3700(a) is insurance from one or more insurers duly authorized to write compensation insurance in this state. Section 3700(b) is a certificate of consent to self-insure from the Director of Industrial Relations, given only on proof of ability to self-insure and to pay compensation that may become due. A two-employee shop ordinarily uses an authorized insurer. Self-insurance is the statute’s other door, and it requires that proof.
  3. List the work and the estimated annual payroll for each of the two employees, plus the legal name, federal employer identification number, and work addresses. Insurance Code section 11750 says each workers compensation insurer shall belong to a qualified rating organization that tabulates rating data and submits pure premium rates to the Insurance Commissioner for approval. The insurer classifies the operations from the work you describe. This page does not print a class code or a rate.
  4. Send that packet to a licensed broker or directly to an authorized insurer. Insurance City Agency, LLC, CA License #6003045, takes it at 956 W Robinhood Dr, Stockton, CA 95207, or by phone at (209) 670-1556. The insurer decides whether to issue the policy. Nothing on this page promises that a particular shop will be written.
  5. When the policy is in force, post the section 3550 notice where employees can read it during the workday. The notice names the current carrier, or states that the employer is self-insured, and names who adjusts claims. If any employee speaks Spanish, post it in English and in Spanish. Section 3550(f) says insurers shall provide this notice to each policyholder.
  6. Keep claim forms on site. Within one working day after you know of an injury that causes lost time beyond the employee’s shift, or medical treatment beyond first aid, section 5401 requires you to give that employee a claim form and a notice of potential eligibility, in person or by first-class mail.
  7. At audit, the insurer compares the payroll estimate with the wages actually paid to those two employees. The audit mechanics sit on the California payroll-audit guide. A first hire, before the headcount reaches two, is a different checklist: primer empleado.

What does Labor Code section 3700 require of a two-employee shop?

Section 3700 says every employer except the state shall secure the payment of compensation. The state, for that section, includes the superior courts of California. A private shop with two employees is not the state. The two lawful methods in the text fetched on 10/4/2026 are an authorized insurer, or a certificate of consent to self-insure. A city or other public agency has a separate self-insurance path in section 3700(c). That public path is not the route for a private two-employee business.

According to the same DIR employer page, the benefits on a covered injury include medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits, a return-to-work supplement, and death benefits. Employees give up the right to sue the employer over those work injuries. The page also says an out-of-state employer may need coverage if employees regularly work in California or if the employment contract is made here. Two employees working a California job are the case this article walks through.

What does the application ask the insurer to classify?

The application is a description of operations, not a price list. Tell the insurer what each person does during the week: one may run a register and the other may drive a delivery van, or both may do the same trade. Estimated annual payroll is the wage figure the insurer uses to classify and to set the deposit. Insurance Code section 11750, checked 10/4/2026, is the statute that puts every workers compensation insurer into a rating organization and sends pure premium rates to the commissioner. The class the insurer assigns can differ from the job title on a business card. Bring prior compensation policies and loss records if the business has them. A brand-new policy has no loss history to attach.

This page does not publish a premium, a class rate, or an experience-rating threshold. Those figures change with the filing the commissioner approves, and a number printed here without that filing would be invented. Call (209) 670-1556 with the two job descriptions and the payroll estimate. The Stockton office is 956 W Robinhood Dr, Stockton, CA 95207. See Insurance City Stockton.

What notice do you post, and when do you hand out a claim form?

Labor Code section 3550(a) requires every employer subject to the compensation law to keep a notice posted in a conspicuous place employees frequent, where they can read it during the workday. The notice states the name of the current compensation carrier, or that the employer is self-insured, and who adjusts claims. Subdivision (d), as amended effective January 1, 2025, says the notice is posted in both English and Spanish where there are Spanish-speaking employees. Subdivision (b) says failure to keep the notice posted is a misdemeanor and is prima facie evidence of noninsurance. Subdivision (f) says insurers shall provide the notice to each policyholder.

Labor Code section 5401(a) sets the claim-form clock. Within one working day of notice or knowledge of an injury under section 5400 or 5402, if the injury causes lost time beyond the employee’s shift at the time of injury, or medical treatment beyond first aid, the employer provides a claim form and a notice of potential eligibility, personally or by first-class mail. The statute defines first aid as any one-time treatment, and any follow-up visit to observe minor scratches, cuts, burns, splinters, or other minor industrial injury. The notice must be available in English and in Spanish. A dated copy of the completed form goes to the insurer and to the person who filed it.

What happens if those two employees work with no policy?

According to Labor Code section 3700.5(a), failure to secure compensation, by someone who knew or reasonably should have known of the duty, is a misdemeanor. The court may impose imprisonment in the county jail for up to one year, or a fine of up to double the premium that would have been due during the uninsured time, but not less than $10,000, or both. Subdivision (b) says a second or subsequent conviction is punished by jail for up to one year, a fine of triple that premium but not less than $50,000, or both.

Labor Code section 3722(a) says that when the stop order is issued and served under section 3710.1, the director also serves a penalty assessment of $1,500 per employee employed at that time, for deposit in the Uninsured Employers Fund, or serves an assessment under subdivision (b) instead. Subdivision (b) applies when the employer was uninsured for more than one week in the preceding calendar year: the greater of twice the premium for the uninsured period, or $1,500 per employee employed during that period. That assessment is in lieu of the subdivision (a) amount, not stacked on top of it. After a Workers’ Compensation Appeals Board finding, subdivision (d) assesses $2,000 per employee in a noncompensable case and $10,000 per employee employed on the date of injury in a compensable case. Subdivision (f) caps penalties under this section at $100,000, except for penalties assessed under subdivision (b). Source: the statute text, checked 10/4/2026.

Frequently asked questions

Statute text for the penalty answers: Labor Code section 3700.5 and section 3722.

Does a California business with two employees have to carry workers compensation?

Yes. The Division of Workers Compensation says the requirement applies even with one employee. Labor Code section 3700 requires every employer except the state to secure compensation through an insurer authorized to write it in this state, or with a certificate of consent to self-insure from the Director of Industrial Relations.

What does the application need for those two employees?

The legal name, the federal employer identification number, the work addresses, a description of the work each employee does, and the estimated annual payroll for each person. Insurance Code section 11750 requires each workers compensation insurer to belong to a rating organization that submits pure premium rates to the Insurance Commissioner. The insurer classifies the work from that description. This page does not state a premium.

What notice do you post after the policy starts?

Labor Code section 3550 requires a notice in a conspicuous place employees can read during the workday. The notice names the current compensation carrier, or states that the employer is self-insured, and names who adjusts claims. If employees speak Spanish, the notice is posted in English and in Spanish. Insurers must provide that notice to each policyholder. Failing to keep it posted is a misdemeanor and is prima facie evidence of noninsurance.

When do you give an injured employee the claim form?

Within one working day after the employer knows of an injury that causes lost time beyond the shift, or medical treatment beyond first aid, Labor Code section 5401 requires a claim form and a notice of potential eligibility, in person or by first-class mail. The notice is available in English and in Spanish.

What penalties apply if those two employees work with no policy?

According to Labor Code section 3700.5, a person who knew, or should have known, of the duty and failed to secure compensation commits a misdemeanor. The fine is up to double the premium that would have been due, and not less than $10,000, with up to one year in county jail, or both. A second conviction raises the floor to $50,000. Labor Code section 3722 also assesses $1,500 per employee when a stop order is served, and separate amounts if a claim is filed.

Sources

Related

Reviewed by Santo Militello, California-licensed Property & Casualty agent (CA License #1737723) and owner of Via Rapida Services. Our licensed team brings more than 70 years of combined insurance experience. Phone (209) 670-1556. Insurance City, 956 W Robinhood Dr, Stockton, CA 95207. San Jose office: 25 N 14th St Ste 125, San Jose, CA 95112. Insurance City Agency, LLC, CA License #6003045. Last reviewed 2026-10-04.

Send the two job descriptions and the payroll estimate

Call (209) 670-1556 Get a Quote

956 W Robinhood Dr, Stockton, CA 95207. Mon–Fri 10am–6pm. Insurance City Agency, LLC. CA License #6003045.

CallQuoteWhatsApp