Do I Need Workers Comp With 1 Employee in California?

Posted by Insurance City on August 18, 2026 — Lee esta guía en español

Answer: Do I need workers comp with 1 employee in California? Yes. Labor Code §3700 requires every employer except the state to secure compensation, by an authorized insurer or by a certificate of consent to self-insure from the Director of Industrial Relations. Section 3700.5 makes a knowing failure a misdemeanor: up to one year in county jail, a fine of up to double the premium that would have been due but not less than $10,000, or both. Officers and directors who work for pay are employees under §3351(c), and partners or managing members who take wages are employees under §3351(f). They opt out only by the written waiver in §3352, which §3351 names. A CSLB contractor with no employees may still file the exemption certificate under Business and Professions Code §7125(b), unless the license is C-8, C-20, C-22, C-39, or D-49. Hiring that one employee ends the certificate.

Insurance City Agency, LLC (CA License #6003045) places these programs from 956 W Robinhood Dr, Stockton, CA 95207, in San Joaquin County, and from 25 N 14th St Ste 125, San Jose. Call (209) 670-1556. No broker fees on standard policies (Stockton and San Jose offices). Reviewed by Santo Militello, licensed insurance broker #1737723. Our licensed team brings more than 70 years combined experience. This page is information about the statutes, not a determination of your own status.

Do I need workers comp with 1 employee in California?

Yes, for that employee. Section 3700 does not wait for a second hire, a payroll threshold, or a full-time schedule. The duty is on the employer, and the two ways to secure payment are an admitted workers’ compensation insurer or a certificate of consent to self-insure from the Director of Industrial Relations. A small shop in Stockton or San Jose almost always uses the insurance path. The owner’s own exclusion, if one is available, does not erase the policy for the person on payroll.

The broader map of who must carry a policy, outside the contractor certificate, is on Do I need workers comp in California? The first-hire sequence is on the first-employee checklist.

Owner and officer exclusions under Labor Code §3351

Section 3351 defines who counts as an employee. Subdivision (c) includes officers and members of the board of a private corporation while they render actual service for pay, and it says they may elect to be excluded under paragraph (16), (18), or (19) of §3352(a). Subdivision (f) includes working partners and managing members of a limited liability company who receive wages irrespective of profits, and it points their election to §3352(a)(17).

The election is a written waiver, not a silent omission. Under §3352(a)(16), a corporate officer qualifies by owning at least 10 percent of the issued and outstanding stock, or at least 1 percent when a parent, grandparent, sibling, spouse, or child owns at least 10 percent and the officer is covered by a health insurance policy or health care service plan. The waiver is signed under penalty of perjury and takes effect when the corporation’s insurance carrier receives and accepts it. A sole shareholder of a private corporation is outside coverage unless that person elects to be subject to workers’ compensation under §4151(a), which §3352(a)(16)(B) states. A general partner or managing member uses the waiver in §3352(a)(17). None of those waivers covers the employee you hired.

The CSLB exemption certificate for contractors with no employees

This is a license filing, separate from the Labor Code exclusion. CSLB’s workers’ compensation page (checked 10/2/2026) says an active licensee, or an applicant for an active license, files either a certificate of insurance or a certification of self-insurance, or a signed exemption certifying that they have no employees. The statute CSLB reprints, Business and Professions Code §7125, says in subdivision (b) that the insurance filing does not apply when both of these are true: the applicant or licensee has no employees and files the registrar’s statement, and the license is not a C-8, C-20, C-22, C-39, or D-49 (a subcategory of C-61). Subdivision (i) says this section remains in effect only until January 1, 2028, and is repealed that day unless a later statute extends it. That repeal date is not the same thing as a rule that every classification already lost the certificate on January 1, 2026.

CSLB’s same page says you cannot file the exemption if you employ anyone subject to the workers’ compensation laws, if a responsible managing employee qualifies the license, or if you hold C-8, C-20, C-22, C-39, or D-49. Those five classifications must carry insurance or a Department of Industrial Relations self-insurance certification whether or not they have employees. C-39 has been in that group under §7125(f). C-8, C-20, C-22, and D-49 are in §7125(g), which speaks to licenses active after July 1, 2023.

What §3700.5 and the license suspension actually say

Section 3700.5(a) applies to a person who knew, or because of knowledge or experience should reasonably have known, of the obligation. The misdemeanor is punishable by imprisonment in county jail for up to one year, or by a fine of up to double the premium, as determined by the court, that would otherwise have been due during the uninsured time, but not less than $10,000, or by both. Subdivision (b) punishes a second or subsequent conviction by up to one year, a fine of triple that premium but not less than $50,000, or both. Subdivision (c) lets the court charge investigation costs on a first conviction and requires them on a later one.

On the license, Business and Professions Code §7125.2 says failure to obtain or maintain workers’ compensation, if required under that chapter, suspends the license by operation of law. The suspension is effective on the date coverage lapses, or on the date coverage is required to be obtained, whichever is earlier. CSLB’s page states the same result in plain words: coverage must be continuous, and work performed while the license is suspended is unlicensed. Roofing is one of the classifications that cannot use the exemption form; the trade package is on C-39 roofing insurance. Concrete is on C-8 concrete and masonry insurance.

Hiring the first employee after an exemption is on file

CSLB’s workers’ compensation page says the exemption stops being valid when you employ anyone subject to California workers’ compensation laws, and proof of coverage must be received at CSLB headquarters within 90 days of the hire. That 90-day filing window is a board instruction. It does not delay Labor Code §3700, which attaches when the person is an employee. Add the classification and the estimated wages to the policy, and keep the certificate continuous. How the year-end payroll audit treats those wages is on the workers comp payroll audit page. The statewide workers’ compensation hub is workers’ compensation insurance.

Frequently asked questions

Do I need workers comp with 1 employee in California?

Yes. Labor Code §3700 requires every employer except the state to secure compensation once there is an employee, by an authorized insurer or a certificate of consent to self-insure. One employee is enough. An owner or officer waiver under §3351 and §3352 does not remove the duty to cover that employee.

Can an owner or officer be excluded from the policy?

Section 3351(c) counts officers and directors as employees while they render service for pay, and §3351(f) counts working partners and managing members who receive wages. They may elect exclusion only by the written waiver in §3352. For a corporate officer, §3352(a)(16) requires at least 10 percent of the issued and outstanding stock, or at least 1 percent when a parent, grandparent, sibling, spouse, or child owns at least 10 percent and the officer has a health plan, plus a waiver the carrier accepts. A sole shareholder of a private corporation is outside coverage unless they elect in under §4151. The waiver does not cover anyone else on payroll.

Can a CSLB contractor with no employees still file an exemption certificate?

Yes, if Business and Professions Code §7125(b) fits. The licensee must have no employees and must file the statement the registrar prescribes, and must not hold a C-8, C-20, C-22, C-39, or D-49 classification. CSLB’s workers’ compensation page also says the form is unavailable when a responsible managing employee qualifies the license. Section 7125(i) keeps this version of the statute in effect only until January 1, 2028, unless the Legislature extends it.

What happens under Labor Code §3700.5 if coverage is not secured?

A person who knew, or should reasonably have known, of the duty and failed to secure compensation commits a misdemeanor. The punishment is up to one year in county jail, a fine of up to double the premium that would have been due but not less than $10,000, or both. A second conviction is up to one year, a fine of triple that premium but not less than $50,000, or both. If a CSLB license was required to have coverage, Business and Professions Code §7125.2 suspends the license by operation of law.

How fast must a contractor replace the exemption after hiring?

CSLB’s workers’ compensation page says the exemption on file stops being valid when you employ anyone subject to the workers’ compensation laws, and proof of coverage must reach CSLB headquarters within 90 days of the hire. Labor Code §3700 applies from the time the person is an employee, not from day 90.

Sources

• California Labor Code §3700 (checked 10/2/2026)
• California Labor Code §3700.5 (checked 10/2/2026)
• California Labor Code §3351 (checked 10/2/2026)
• California Labor Code §3352 (checked 10/2/2026)
• CSLB reprint of Business and Professions Code §7125 (checked 10/2/2026)
• CSLB workers’ compensation requirements (checked 10/2/2026)
• Business and Professions Code §7125.2 (checked 10/2/2026)

Related reading:

• Lee esta guía en español
• Do I need workers comp in California?
• First employee insurance checklist
• Workers comp payroll audit in California
• Workers’ compensation insurance

Insurance City Agency, LLC — Stockton: 956 W Robinhood Dr, Stockton, CA 95207 — San Jose: 25 N 14th St Ste 125, San Jose, CA 95112 — (209) 670-1556. CA License #6003045. Reviewed by Santo Militello, licensed insurance broker #1737723. Our licensed team brings more than 70 years combined experience. No broker fees on standard policies (Stockton and San Jose offices).