California Contractor Employment Rules 2026: Workers' Comp, Wages and Final Pay

The workers' compensation certificate the CSLB requires

Workers' compensation is where the license law and the labour law meet. Under Business and Professions Code section 7125, a current and valid Certificate of Workers' Compensation Insurance, or a Certification of Self-Insurance, is a condition precedent to the issuance, reinstatement, reactivation, renewal or continued maintenance of a licence. The certificate must be issued by an insurer authorised to write workers' compensation in California, while self-insurance certification comes from the Director of Industrial Relations. There is a narrow exemption: a licensee with no employees may file a statement to that effect, but only if the licensee does not hold a C-8, C-20, C-22, C-39 or D-49 classification, because those trades are treated as hazardous enough to require coverage regardless. The certificate is not required while a licence is inactive on the board's records. If a certificate is received within 90 days after its effective date, the registrar accepts it as of that date under section 7125.1, which can retroactively cure a gap.

• A current certificate is a condition of issuing, renewing or maintaining a licence (B&P Code § 7125).
• The no-employees exemption is unavailable to C-8, C-20, C-22, C-39 and D-49 holders (B&P Code § 7125).
• No certificate is required while the licence is inactive (B&P Code § 7125).
• A certificate received within 90 days of its effective date is accepted as of that date (B&P Code § 7125.1).

What happens if coverage lapses

The consequences of a coverage gap are severe and largely automatic, which is why the exam returns to them. Under Business and Professions Code section 7125.2, failure to obtain or maintain required workers' compensation coverage suspends the licence by operation of law, and the suspension is effective on the earlier of the date coverage lapses or the date coverage was required to be obtained. There is no need for a hearing first: the suspension simply happens. The civil penalties in section 7125.4 add teeth. A sole owner licensee who employed workers without coverage faces a minimum civil penalty of $10,000 per violation, and a partnership, corporation, limited liability company or tribal business licensee faces a minimum of $20,000 per violation. On top of that, any licensee, agent or officer who violates the workers' compensation article is guilty of a misdemeanour under section 7126. When the registrar issues a stop order for a failure to secure coverage, the employer must pay affected employees for their time lost, not exceeding 10 days, while it comes into compliance, under section 7127.

Paying wages and the deadlines when a worker leaves

The Labor Code defines wages broadly. Under section 200, wages include all amounts for labour performed by employees, whether the amount is fixed or figured by time, task, piece, commission or any other method of calculation. Regular paydays follow a semimonthly rule in section 204: labour performed between the first and the fifteenth of a month must be paid between the sixteenth and the twenty-sixth of that same month, and labour from the sixteenth to the end of the month must be paid between the first and the tenth of the following month. The rules that trip contractors up are the final-pay deadlines. When an employer discharges a worker, the wages earned and unpaid are due immediately at the time of discharge under section 201. When a worker quits without giving notice, the final wages are due within 72 hours under section 202, but a worker who gives at least 72 hours of notice is entitled to be paid at the time of quitting. A special rule in section 201.7 gives oil-drilling employers 24 hours, excluding Saturdays, Sundays and holidays, to pay a laid-off worker. Missing these deadlines is expensive because of the waiting-time penalty in section 203, under which unpaid final wages continue as a penalty at the worker's regular daily rate until paid, for a maximum of 30 days.