If you work alone, California generally does not require you to carry workers’ comp on yourself. That changes for every CSLB licensee on January 1, 2028. And a 1099 does not automatically make someone a subcontractor. In construction, an unlicensed “sub” is presumed to be your employee, which can put their injury, and their payroll, on your policy. Here is how the rules fit together.
I’m self-employed with no employees. Do I need workers’ comp?
Under the general rule, a sole proprietor with no employees is not their own employee, so no policy is required to cover the owner. For licensed contractors, two exceptions apply:
- Certain classifications already must carry it. C-39 Roofing, C-8 Concrete, C-20 HVAC, C-22 Asbestos Abatement and C-61/D-49 Tree Service licensees need workers’ comp regardless of employees today.
- Everyone else from January 1, 2028. Under SB 216 as amended by SB 1455, the no-employee exemption ends for all CSLB classifications. Before that, starting January 1, 2027, the CSLB is required to have a process to verify that licensees claiming the exemption actually qualify.
The moment you hire one employee, full-time, part-time or for a single day, coverage is required whatever your classification. Our requirement check gives you the answer for your license in two questions.
Can I buy workers’ comp on myself?
Yes. A sole proprietor can buy a policy that covers the owner, and partners, LLC members and corporate officers can be included or, if they qualify, excluded. Owners do it for three reasons:
- General contractors increasingly want a comp certificate from every sub on site, whether or not the law requires one.
- Health insurance can exclude or fight work injuries. A comp policy pays medical bills and part of lost income for an on-the-job injury.
- Starting a small policy now builds a claims and payroll history before 2028, when every exempt licensee is shopping at once.
The premium for an owner-only policy is based on an assigned payroll amount for the owner and the class code for your trade. Owners who are excluded can sometimes keep a minimum policy in force so they can show the certificate a GC asks for. Ask us which structure fits; it depends on your entity type and the contracts you sign.
When a 1099 sub is legally your employee
This is where most self-employed contractors get into trouble. In California construction, how you pay someone does not decide whether they are a contractor or an employee. Three rules matter:
1. The unlicensed-contractor presumption
Under Labor Code section 2750.5, a worker doing work that requires a contractor’s license is presumed to be an employee unless they hold that license. If you hire an unlicensed “sub” for licensed work, you can be treated as the employer of that person, and of anyone they hire, for workers’ comp. If they get hurt on your job, the claim can come to your policy. If you have no policy, it comes to you.
2. The ABC test, and the construction exception
Since AB 5, California generally decides employee status with the ABC test. A worker is an employee unless the hiring business shows all three: the worker is free from its control, the work is outside the usual course of its business, and the worker runs an independent business of the same kind. A roofing sub doing roofing for a roofing company fails the second part almost automatically.
Construction has its own exception. Under Labor Code section 2781, a subcontractor can be judged under the older, more flexible Borello test instead, but only if every condition is met, including:
- a written subcontract
- a valid CSLB license covering the work being performed
- a business license or business tax registration, where required
- a business location separate from yours, and authority to hire and fire its own workers
- the sub takes financial responsibility for its work, shown by insurance, indemnity, performance bonds or warranties
- the sub is customarily in an independent business of the same kind
Miss one and you are back to the ABC test.
3. The audit
Even when a sub is a real business, your carrier’s premium auditor will ask for a certificate of workers’ comp or a CSLB exemption for every sub you paid. If you cannot produce one for the period, that sub’s labor is usually added to your payroll and billed at your class rate. That is the single most common surprise bill we see for small contractors.
What to do this year
- Check every sub’s license on the CSLB site before they start, and keep a screenshot.
- Use a written subcontract for every job, even small ones.
- Collect a comp certificate or exemption from each sub, and track expiration dates. Our sub compliance guide shows how.
- Price your own policy now if you are exempt and planning for 2028, so it is a budget line rather than a surprise.
Sources
- California Labor Code §2750.5 — presumption that an unlicensed contractor is an employee
- California Labor Code §2781 — construction subcontractor conditions for the Borello test
- California EDD — DE 231G, Construction Industry information sheet (employment status in construction)
- SB 1455 (2024) — moves the all-licensee workers’ comp requirement to January 1, 2028; exemption verification by January 1, 2027
- CSLB — Workers’ Compensation requirements and exemption certificates
- California Division of Workers’ Compensation — employer FAQs
Common questions
Do self-employed contractors need workers’ comp in California?
A sole proprietor with no employees is generally not required to cover themselves. But C-39, C-8, C-20, C-22 and C-61/D-49 licensees must carry it regardless of employees, and from January 1, 2028 the no-employee exemption ends for every CSLB classification.
Can a sole proprietor buy workers’ comp for themselves in California?
Yes. A sole proprietor can buy a policy that covers the owner. Many do so to satisfy general contractors who require a comp certificate from every sub, to cover work injuries that health insurance may not, and to build a policy history before the 2028 requirement.
Is a 1099 subcontractor my employee for workers’ comp in California?
Possibly. Under Labor Code section 2750.5, a worker doing licensed construction work without a contractor’s license is presumed to be an employee. A licensed sub can be treated as independent under Labor Code section 2781 only if every condition is met, including a written subcontract, a valid CSLB license covering the work, a separate business location, authority to hire and fire, and financial responsibility for its work such as insurance or bonds. Otherwise the ABC test applies.
What happens at audit if my sub has no workers’ comp?
If you cannot produce a workers’ comp certificate or CSLB exemption for a sub for the policy period, the auditor will usually add that sub’s labor to your payroll and bill it at your class rate.
General guidance for California contractors, not legal advice. Your policy wording, CSLB record and payroll govern.