By Oakview Insurance Services | Yuba City, CA | Contractor Insurance
If you hold a California contractor license and have no employees, you have likely filed a workers’ compensation exemption with the CSLB and never thought about it again. That option is going away. Starting January 1, 2028, California law requires every licensed contractor to carry workers’ compensation insurance, regardless of whether they have a single employee.
This has already happened once for a handful of trades. It is about to happen for everyone else.
Here is what changed, who it affects first, what the penalties look like, and what to do about it before the deadline arrives.
Why This Law Exists
Senate Bill 216 passed in 2022 to close a gap the state had lived with for years. Before SB 216, a contractor with no employees could file a certificate of exemption with the CSLB and legally operate without workers’ comp. In practice, some of those “no employee” operations were running day laborers and 1099 subcontractors without any coverage in place. When someone got hurt, there was no policy to respond, and the financial exposure landed on the injured worker, or on the homeowner or general contractor who hired the crew.
SB 216 phased out the exemption entirely. The original timeline set the universal deadline for January 1, 2026. Senate Bill 1455 pushed that back to January 1, 2028, giving the CSLB more time to build out its verification process. That is the deadline standing today.
The Trades Already Living With This
Five contractor classifications did not get the extension. Since July 2023, these license types have been required to carry workers’ compensation regardless of employee count, as a condition of getting or renewing their license:
- C-8 Concrete
- C-20 HVAC
- C-22 Asbestos Abatement
- C-39 Roofing
- D-49 Tree Service
If you hold one of these licenses, this is not a future problem. It is a current one, and the CSLB will not process your application or renewal without an active policy already in place.
What Changes in 2028
For every other contractor classification, the sole-proprietor exemption ends on January 1, 2028. Plumbers, electricians, painters, landscapers, framers, drywall contractors, general contractors, and every other C or B license holder will need an active workers’ compensation policy to keep their license current, with no exception for having zero employees.
There is a verification step built into the timeline as well. Contractors currently claiming the no-employee exemption will need to go through a CSLB verification process by January 1, 2027, to confirm they actually qualify. The board is not simply taking the exemption filing at face value going forward.
What Happens If You Do Not Comply
The penalties attach to the license, not just the payroll. Non-compliance can trigger fines starting at $10,000 per violation for sole proprietors and $20,000 for corporations, LLCs, and partnerships, with repeat violations climbing as high as $30,000. The CSLB will not renew or reinstate a license until valid coverage is documented. For a trade license you spent years earning, that is not a minor administrative issue. It is a stop-work problem.
What This Means If You Are a Solo Operator Today
If you are currently exempt and running your operation solo, three things are worth doing now rather than waiting until late 2027:
- Confirm your license classification and whether you already fall under the 2023 mandate (C-8, C-20, C-22, C-39, D-49) or the 2028 deadline
- Get quoted now while your health and claims history are clean, since workers’ comp rates are underwritten on exactly those factors
- If you are a true sole proprietor with genuinely no employees, ask about a ghost policy, sometimes called a zero-payroll or minimum-premium workers’ comp policy. It satisfies the CSLB requirement without pricing you as if you were running a full crew
Waiting until the deadline is close means competing with every other solo contractor in the state trying to get bound at the same time, and it means starting your claims history from zero right when the state’s verification scrutiny is highest.
What to Do Before January 1, 2028
- Check your license classification against the Phase 1 list above. If you are C-8, C-20, C-22, C-39, or D-49, you should already have a policy in place
- If you are currently filing a no-employee exemption, mark January 1, 2027 as the date you need to have completed CSLB verification
- Ask your broker to quote a ghost policy now if you have no employees, so pricing and paperwork are settled well ahead of the deadline
- If you already carry employees, confirm your current policy has no gaps and that your certificate is current, since the state gives no grace period on lapses
How Oakview Insurance Can Help
We write workers’ compensation for contractors across Yuba, Sutter, Colusa, and Butte Counties every day, from solo operators just getting licensed to multi-crew companies running commercial subcontracts. We know which classifications are already under the mandate, which ones have until 2028, and how to set up a ghost policy correctly for a true sole proprietor who needs a compliant COI without paying for coverage they do not need.
If your license renewal is coming up, or you just want to know where your specific trade stands on this timeline, call us at (530) 674-5054 or start a quote online. There is no cost to having someone walk through your situation before the deadline arrives.