SB 216 and the 2028 Workers' Comp Requirement for California Contractors

Right now, a California contractor with no employees can still file an exemption with the CSLB instead of carrying workers' compensation, unless the license includes a C-8, C-20, C-22, C-39 or D-49 classification. That changes on January 1, 2028. Under SB 216, as delayed by SB 1455, every CSLB licensee must have a current Certificate of Workers' Compensation Insurance (or a DIR Certification of Self-Insurance) on file. The only exemption written into the 2028 version of the law is for a joint venture with no employees.

Most of the web still says this starts in 2026. It doesn't. This guide covers what the law requires today, what changes in 2028, what happens to your license if you're out of compliance, and how to get a policy in place. If you're shopping now, see our contractors insurance page.

The short version

	Today (through December 31, 2027)	From January 1, 2028
Licensee with employees	Must carry workers' comp	Must carry workers' comp
Licensee with no employees, ordinary classification	May file a CSLB exemption	Must carry workers' comp (no "no-employee" exemption in the statute)
C-8, C-20, C-22, C-39 or D-49 licensee with no employees	Must carry workers' comp	Must carry workers' comp
License qualified by an RME	CSLB says you can't file an exemption	Must carry workers' comp
Joint venture with no employees	May file an exemption	May file an exemption
Inactive license	No certificate or exemption required	No certificate required

Sources: Bus. & Prof. Code §7125 (both versions, as amended by SB 1455); CSLB Workers' Compensation Requirements page.

How we got here: the timeline

Roofers first (since at least 2007)

C-39 roofing contractors have had to carry workers' comp even with no employees for many years. Legislative Counsel's Digest for AB 2305 (2010) describes the rule as already existing law and refers to roofing licenses active on January 1, 2007. Roofers are also the only trade with a special audit statute: under Insurance Code §11665, an insurer that writes workers' comp for a C-39 licensee must perform an annual payroll audit that includes an in-person visit to verify the employee count.

SB 216 (2022): four more trades, then everyone

SB 216 (Dodd) was introduced in 2021 and signed on September 30, 2022 as Chapter 978, Statutes of 2022. It did two things:

1. Added four classifications to the "carry it even with no employees" list: C-8 concrete, C-20 HVAC, C-22 asbestos abatement and D-49 tree service. For licenses active after July 1, 2023, the CSLB removes those classifications from a license that lacks a valid certificate, instead of suspending the whole license. If the licensee is then found to have employees and no coverage, the license is suspended.

2. Set January 1, 2026 as the date when all licensees, regardless of classification, would need workers' comp, with the only exemption being joint ventures with no employees.

SB 1455 (2024): the delay to 2028

SB 1455 (Ashby), Chapter 485, Statutes of 2024, signed September 22, 2024, moved the all-licensee requirement from January 1, 2026 to January 1, 2028. It also added Bus. & Prof. Code §7125.7, which directs the CSLB to set up a process to verify that licensees who claim no employees really qualify for the exemption.

SB 291 (2025): bigger penalties, tighter verification

SB 291 (Grayson), Chapter 455, Statutes of 2025, signed October 7, 2025, amended §7125.4 and §7125.7:

• A false exemption, or employing someone without coverage, now carries minimum civil penalties of $10,000 per violation for a sole owner and $20,000 per violation for a partnership, corporation, LLC or tribal business. Additional penalties for later violations can reach $30,000 per occurrence in total.

• The CSLB may not renew or reinstate a license in violation until a valid certificate is on file.

• The CSLB's verification process must include "an audit, proof, or other means to obtain evidence," and the CSLB must report the proposed process to the Legislature by January 1, 2027.

What a contractor with no employees should do

Until December 31, 2027

If you have no employees and none of the five listed classifications, you can keep the Exemption from Workers' Compensation on file with the CSLB. The CSLB says you cannot file the exemption if:

• you employ anyone in a way that's subject to California workers' compensation law;

• your license is qualified by a Responsible Managing Employee (RME); or

• you hold a C-8, C-20, C-22, C-39 or C-61/D-49 classification.

Be careful with the word "employee." Under Labor Code §3357, anyone performing services for you is presumed to be an employee. Under Labor Code §2750.5, someone doing work that requires a contractor's license who doesn't hold one is presumed to be your employee. A "helper" paid in cash or on a 1099 can make your exemption false. See 1099 workers and subcontractors.

If you hire, the CSLB says the exemption becomes invalid when you hire, and proof of coverage must reach CSLB headquarters within 90 days. Separately, Labor Code §3700 requires every employer to secure workers' compensation, so get the policy before the first day of work, not afterward.

From January 1, 2028

Under the version of §7125 that becomes operative on January 1, 2028, a certificate of workers' comp insurance (or self-insurance) on file is a condition of issuing, reinstating, reactivating, renewing and continuing a license. The no-employee exemption isn't in that version. The only exemption is a joint venture with no employees that files the CSLB statement.

Plan now:

3. Get a policy with an effective date on or before January 1, 2028, and make sure the insurer files the certificate with the CSLB before then. Certificates are processed on the date the CSLB receives a correct one, and errors delay processing.

4. Don't wait for your renewal date. The requirement applies to "continued maintenance" of the license, not just renewal.

5. Consider going inactive if you won't be contracting. An inactive license doesn't need a certificate while it's inactive.

6. Watch for a new exemption.7125.7 tells the CSLB to build a verification process for licensees without employees, and the agency's report is due to the Legislature by January 1, 2027. Any change to the 2028 rule would need new legislation. Until then, plan on needing a policy.

Need a workers' comp policy before 2028? TSM is an independent agency — we compare carriers for you. Call (209) 524-6366 (Modesto) or (530) 221-3031 (Redding).

What happens to your license if you don't comply

Problem	Consequence	Source
Coverage lapses or isn't obtained when required	Automatic suspension of the license by operation of law, effective when coverage lapses or when it was first required	Bus. & Prof. Code §7125.2
C-8, C-20, C-22, C-39 or D-49 without a certificate	Those classifications are removed from the license. If you're then found to have employees without coverage, the whole license is suspended	Bus. & Prof. Code §7125(f)–(g)
Working while suspended	CSLB treats it as unlicensed contracting and may take disciplinary action	CSLB
False exemption, or employing workers without coverage	Disciplinary action; minimum civil penalties of $10,000 (sole owner) or $20,000 (entity) per violation; no renewal until a certificate is filed	Bus. & Prof. Code §7125.4 (SB 291)
The license's qualifier failed to prevent the violation	The qualifier is guilty of a misdemeanor	Bus. & Prof. Code §7125.4(b)
Insurer cancels after an audit finds material misrepresentation and you don't repay	The insurer reports you to the CSLB	Bus. & Prof. Code §7125(e)

The CSLB lifts a workers' comp suspension once acceptable proof of coverage is received and processed at headquarters. Any work done during the gap remains unlicensed work. If you've worked during a suspension, talk to a construction attorney about what that means for your contracts.

Penalties outside the CSLB

If you have employees and no coverage, the Labor Commissioner (DIR) can act separately from the CSLB:

• Stop order. The Director must issue a stop order barring the use of employee labor until you comply, and employees must be paid for up to 10 days of lost time (Labor Code §3710.1).

• Penalty assessment. Generally $1,500 per employee at the time of the stop order. If you were uninsured for more than a week in the prior calendar year, the penalty is the greater of twice the premium you should have paid or $1,500 per employee (Labor Code §3722(a)–(b)).

• An injured employee of an uninsured employer can sue you directly for damages, outside the workers' comp system (Labor Code §3706).

How to get a policy (and get it on file)

7. Get quotes through an agent who writes contractor workers' comp. Owner-only and small-payroll contractors are often written at an insurer's minimum premium. Pricing varies by insurer, class code and payroll. See how workers' comp premiums are calculated.

8. Get your class codes right from day one. Construction is classified by trade, many trades have dual wage codes, and the lower-rated code requires time records with start and stop times.

9. Decide about owner coverage. Owners, officers, partners and LLC members are treated differently under Labor Code §§3351–3352, and some can elect in or out. Your agent should explain what your entity type allows before you sign anything.

10. Make sure the insurer files the certificate with the CSLB. The certificate must be issued by an insurer licensed in California and show CSLB as certificate holder, your exact business name, your license (or application) number, the policy number and dates, and an authorized signature. Insurers can file electronically. Under Bus. & Prof. Code §7125.6, licensees also list up to their top three workers' comp classification codes.

11. Keep it continuous. A lapse means automatic suspension. Pay on time, and treat any cancellation notice as urgent.

12. Prepare for the audit. Your premium is finalized after the policy year, and C-39 roofers get an annual in-person audit. See our workers' comp premium audit

Workers' comp is one piece of a contractor's program. For the rest (general liability, the license bond, commercial auto, tools and equipment), see business insurance for California contractors and CSLB license bond vs liability insurance. If you're the one hiring subs, use our certificate of insurance request template and read about the risks of hiring a contractor without insurance.

FAQs

Is SB 216 in effect in 2026?

Partly. The C-8, C-20, C-22 and D-49 requirement (alongside C-39 roofing) is in effect now. The requirement for all licensees was moved from January 1, 2026 to January 1, 2028 by SB 1455 (Ch. 485, Stats. 2024).

Do I need workers' comp if I'm a contractor with no employees in California?

Through December 31, 2027, generally no. You can file the CSLB exemption unless you hold C-8, C-20, C-22, C-39 or D-49 or your license is qualified by an RME. From January 1, 2028, the statute requires a certificate for every active licensee. The only exemption is a joint venture with no employees.

Which contractors must carry workers' comp even without employees?

C-8 concrete, C-20 HVAC, C-22 asbestos abatement, C-39 roofing and D-49 tree service (Bus. & Prof. Code §7125(b)(2)).

What happens if my workers' comp lapses?

Your license is automatically suspended as of the lapse date (Bus. & Prof. Code §7125.2). The CSLB treats any work done during the suspension as unlicensed contracting.

What is the penalty for a false workers' comp exemption?

Disciplinary action, including minimum civil penalties of $10,000 per violation for a sole owner and $20,000 for an entity (Bus. & Prof. Code §7125.4, as amended by SB 291). The license's qualifier can also face a misdemeanor.

Will there be a new exemption before 2028?

The CSLB must report a verification process for licensees without employees to the Legislature by January 1, 2027 (Bus. & Prof. Code §7125.7). Any new exemption would need legislation. Until that happens, plan on needing a policy.