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California Workers' Compensation Basics

How Workers' Compensation Works

All California employers must provide workers' compensation benefits to their employees under California Labor Code Section 3700. There are five basic types of workers' compensation benefits - medical care, temporary disability benefits, permanent disability benefits, vocational rehabilitation services, and death benefits.

How Is Coverage Structured in a Workers' Compensation Policy?

Workers' compensation coverage is offered under Part One of a workers' compensation insurance policy. In Part One, the insurance company agrees to promptly pay all benefits and compensation due to an injured worker. Employers Liability insurance can provide important coverage in addition to workers' compensation insurance. Employers Liability is offered under Part Two of a workers' compensation and Employers Liability Insurance policy. Employers Liability Part Two protects the employer against instances where an employee's injury or disease is not considered work related.

How Is Workers' Compensation Insurance Purchased?

Employers must purchase workers' compensation insurance from either a licensed insurance company or through the State Compensation Insurance Fund (SCIF). SCIF is a state-operated entity that exists in order to transact workers' compensation on a non-profit basis. SCIF competes with private workers' compensation insurance companies for business and also operates as the insurer of last resort if private companies are not willing to offer workers' compensation insurance

What Happens to an Employer Who Does Not Purchase Workers' Compensation Insurance?

Employers who fail to purchase workers' compensation insurance are in violation of the California Labor Code. The Director of the Department of Industrial Relations has the authority to issue a stop order against any company who is discovered to be unlawfully uninsured for workers' compensation. A stop order closes down business operations until workers' compensation insurance is secured.