California Contractors Need Workers Compensation Insurance, or else…

On February 10, 2012 by

One of my favorite places to find good content and expert opinion regarding construction and legal issues is This is a service whereby bloggers and others can post content and it is marketed by JDSupra. In one of JD’s tweets last week I discovered a very informative article by Matthew Hicks regarding Workers’ Compensation Insurance law and jurisprudence in California.

Hicks sites two landmark cases, Wright v. Isaak, 149 Cal.App.4th 1116 (2007) and Loranger v. Jones, 184 Cal.App.4th 847 (2010). See Hicks article for the in depth analysis of these cases. The bottom line here is that all California contractors need to be sure to maintain proper and adequate workers compensation insurance.

The main statutory component of Hicks article and the source of Workers Compensation law in California come from California Business and Professions Code §7125.2 which states in pertinent part:

“The failure of a licensee to obtain or maintain workers’ compensation insurance coverage, if required under this chapter, shall result in the automatic suspension of the license by operation of law in accordance with the provisions of this section…”

The key elements here are 1) obtain or maintain, basically saying that the contractor has a duty to get it and then a duty to keep up the correct amount of insurance. The other important element quoted above is 2) the fact that the suspension of the license occurs by “operation of law,” meaning that you do not have to be caught and if/when a contractor is caught without or under insured, the suspension of the license will have automatically happen retroactive to the date of insufficient coverage. Needless to say, this is pretty powerful language.

Just as Hicks points out in his well written-piece, contractors need to abide by and closely adhere to the requirements for Workers Compensation insurance. This can be complicated and contractors should get legal advise when making such decisions.

For further reading see Wesley E. Meyers article here.

On Feb 10, 2012