California's Workers' Comp Insurance Requirement
Who Must Have Insurance?
California Labor Code Section 3700 requires every employer to secure workers' compensation coverage. This includes:
- • Businesses with even one employee
- • Part-time, full-time, temporary, and seasonal workers
- • Small family businesses that hire non-family members
- • Employers of undocumented workers (immigration status irrelevant)
- • Construction contractors and subcontractors
- • Corporations, LLCs, sole proprietorships, and partnerships
Limited Exceptions (Rarely Apply):
- • Sole proprietors with zero employees
- • Corporate officers who formally opt out (must file specific paperwork)
- • Certain licensed professionals in sole practice
- • Legitimate independent contractors (rare; most workers are employees)
If you perform work for someone who pays you, you're probably an employee entitled to workers' comp coverage. Don't accept your employer's claim that you're "not covered."
How to Verify Your Employer Has Insurance
Check These Sources:
- 1. Workplace Posting
California law requires employers to post workers' comp insurance information where employees can see it. Look for a poster listing the insurance carrier name and policy number.
- 2. Ask Your Employer Directly
Request the name of the insurance carrier and policy number. Employers are legally required to provide this information.
- 3. DIR Online Coverage Verification
Visit the California Department of Industrial Relations website to search for employer coverage by business name or federal tax ID.
- 4. Contact Information & Assistance Unit
Call (800) 736-7401 to verify coverage or report an uninsured employer.
Option 1: Filing with the Uninsured Employers Benefits Trust Fund (UEBTF)
What Is UEBTF?
The Uninsured Employers Benefits Trust Fund is a state-funded program that guarantees workers' compensation benefits when your employer illegally operates without insurance. It functions like a regular workers' comp claim.
UEBTF Provides:
- • Full medical treatment (doctor visits, surgery, physical therapy, medications)
- • Temporary disability payments (2/3 of wages while off work)
- • Permanent disability compensation based on impairment rating
- • Vocational rehabilitation if you can't return to your job
- • Death benefits to dependents (if injury is fatal)
How to File a UEBTF Claim
- 1. Report Injury to Employer
You still report the injury to your employer within 30 days and request a DWC-1 claim form, even though they have no insurance.
- 2. File DWC-1 with UEBTF
Submit the completed claim form directly to the Uninsured Employers Benefits Trust Fund (not your employer). Include documentation proving the employment relationship.
- 3. UEBTF Investigates
UEBTF verifies your employer lacked insurance and confirms you were an employee (not independent contractor). This takes 30-60 days typically.
- 4. Benefits Begin
Once approved, you receive medical treatment authorization and temporary disability payments just like a standard workers' comp claim.
- 5. Settlement
After reaching maximum medical improvement, you receive a permanent disability settlement from UEBTF based on your rating.
Important Deadlines:
- • 1 year from injury date to file UEBTF claim (strictly enforced)
- • File as soon as you discover employer has no insurance
- • Delays can result in loss of benefits
Option 2: Suing Your Uninsured Employer in Civil Court
Why You Can Sue (Exclusive Remedy Exception)
Normally, workers' comp is your exclusive remedy against your employer. But employers who fail to carry required insurance lose this protection. You can sue them like any other personal injury defendant.
What You Can Sue For (Unlike Workers' Comp):
- ✓ Pain and Suffering: Compensation for physical pain, discomfort, and reduced quality of life
- ✓ Emotional Distress: Anxiety, depression, PTSD, mental anguish from the injury
- ✓ Full Lost Wages: 100% of lost income (not just 2/3 like workers' comp)
- ✓ Loss of Earning Capacity: Reduced future earnings due to permanent limitations
- ✓ Punitive Damages: Extra damages to punish employer for illegal conduct
- ✓ Loss of Enjoyment of Life: Activities you can no longer do
- ✓ Medical Expenses: All past and future treatment costs
What You Must Prove
Unlike workers' comp (which is no-fault), a civil lawsuit requires proving:
- 1. Employment Relationship: You were an employee, not independent contractor
- 2. Employer Negligence: Employer's failure to provide safe workplace caused injury
- 3. Causation: Employer's negligence directly caused your injury
- 4. Damages: You suffered actual harm (medical bills, lost wages, pain, etc.)
- 5. Lack of Insurance: Employer had no valid workers' comp coverage at time of injury
Settlement Value Comparison
Example: Serious Back Injury (Herniated Disc, Surgery)
Workers' Comp Only (Insured Employer)
Civil Lawsuit (Uninsured Employer)
Note: Civil lawsuit values are 4-5x higher due to pain/suffering damages unavailable in workers' comp.
Statute of Limitations
For the civil lawsuit, California's personal injury statute of limitations gives you 2 years from the date of injury to file. This is different from the 1-year UEBTF deadline.
Strategic Timing: You can file UEBTF claim immediately (to get benefits flowing) while your attorney investigates and prepares the civil lawsuit. Many workers settle the lawsuit 12-18 months later once medical treatment concludes and full damages are known.
Pursuing Both UEBTF and Civil Lawsuit Simultaneously
Why File Both?
UEBTF provides immediate relief. You get medical treatment right away and temporary disability to replace lost wages while recovering. Civil lawsuits take time (12-24 months typically).
Civil lawsuit provides full compensation. Once you reach maximum medical improvement and know your permanent damages, you settle the lawsuit for pain and suffering and other damages UEBTF doesn't cover.
How UEBTF Lien Works
If you receive UEBTF benefits and later win a civil lawsuit, UEBTF has a lien (legal claim) on your lawsuit settlement for amounts they paid you (medical expenses and disability).
Example Lien Calculation:
If you win $450,000 in your civil lawsuit, UEBTF recovers their $98,000 from that settlement. You net $352,000 after the lien—still far more than workers' comp alone would have provided.
Attorney's Role: Your lawyer negotiates to reduce the UEBTF lien based on litigation costs and risk. UEBTF often accepts less than full reimbursement to avoid the uncertainty of trial.
Common Employer Defenses (And How to Defeat Them)
Defense #1: "You're an Independent Contractor, Not an Employee"
Employers frequently misclassify employees as independent contractors to avoid insurance costs. California law presumes workers are employees unless the employer proves otherwise under the strict "ABC test."
To Be an Independent Contractor, ALL Three Must Be True:
- A. Worker is free from employer's control and direction
- B. Worker performs work outside the usual course of employer's business
- C. Worker is customarily engaged in an independently established trade or business
Example: A construction laborer who works regular hours under supervisor direction, uses employer's tools, and doesn't have their own established business is an employee, even if the employer calls them a "contractor."
Defense #2: "We Thought We Had Insurance" or "The Policy Lapsed"
Ignorance is not a defense. Employers are strictly liable for having coverage. Even a temporary lapse (missed premium payment) exposes them to lawsuit liability.
Defense #3: "Your Injury Wasn't Work-Related"
Unlike workers' comp (where you only prove AOE/COE), civil lawsuits require proving employer negligence caused the injury. Your attorney gathers evidence of unsafe conditions, OSHA violations, and employer knowledge of hazards.
What Happens to the Employer?
Operating without required workers' comp insurance carries severe penalties:
Criminal Penalties:
- • Misdemeanor charges
- • Fines up to $10,000 per violation
- • Potential jail time (up to 1 year)
- • Separate penalty for each uninsured employee
Civil Penalties:
- • Stop Order closing the business
- • Penalty assessments up to $100,000
- • Liability for full lawsuit damages
- • No bankruptcy protection for judgment
These penalties are separate from your right to sue. The state prosecutes the employer while you pursue your civil claim.
Steps to Take Immediately
- 1. Seek Medical Treatment
Get treatment immediately through your health insurance or emergency room. Keep all receipts and records.
- 2. Report Injury to Employer in Writing
Report within 30 days via email or written notice. Request the DWC-1 form. Document their response (or lack thereof).
- 3. Verify Insurance Status
Check with DIR or call the Information & Assistance Unit to confirm employer's lack of coverage.
- 4. Contact a Workers' Comp Attorney ASAP
Uninsured employer cases are complex, involving both UEBTF claims and civil litigation. Get legal help immediately.
- 5. Preserve Evidence
Photograph the accident scene, hazardous conditions, and your injuries. Get witness contact information. Save all communications with employer.
- 6. File UEBTF Claim Within 1 Year
Don't miss this deadline. Your attorney files the UEBTF claim and simultaneously prepares your civil lawsuit.
Why You Need an Attorney for Uninsured Employer Cases
These cases involve dual proceedings (UEBTF + civil lawsuit) with different rules, deadlines, and strategies:
- • Proving employment status against misclassification defenses
- • Navigating UEBTF bureaucracy to get benefits approved
- • Building negligence case with expert witnesses and evidence
- • Calculating full damages including pain and suffering valuation
- • Negotiating UEBTF lien reduction to maximize your net recovery
- • Trial experience if employer won't settle fairly
Success requires expertise in both workers' comp and personal injury law. Our firm handles both aspects, ensuring you receive immediate UEBTF benefits while building the strongest possible civil case.
Free consultation. We review your case, verify insurance status, and explain your options at no cost. Contingency fee (15% workers' comp, 33% personal injury). No upfront costs.