Home-Based Businesses in California Can’t Afford to Skip Workers’ Compensation

If you run a home-based business in California—even without a traditional storefront—you may still be legally required to carry workers’ compensation insurance. Recent legal changes and enforcement actions have made this a critical issue for small business owners, freelancers, and remote-first teams.

New Laws Expanding Coverage Requirements

As of 2025, California has expanded workers’ compensation requirements to cover more business types and roles:

• SB 216: This law mandates that all licensed contractors—regardless of whether they have employees—must carry workers’ compensation insurance by 2026. This includes solo operators in trades like HVAC, concrete, and tree services. 
• AB 5 & Prop 22: While Proposition 22 was upheld in 2024, allowing app-based companies to classify drivers as independent contractors, legal debates continue over worker classification. This ongoing uncertainty underscores the importance of proper coverage.

Enforcement Actions Highlight Risks

In April 2025, the California Department of Insurance ordered two Los Angeles delivery company owners to repay over $2 million after they underreported payroll and left employees uninsured. This case exemplifies the severe penalties businesses can face for non-compliance. 

Remote Workers Are Also Covered

California law stipulates that remote employees are entitled to workers’ compensation benefits if injured while performing work-related duties at home. Employers must ensure a safe work environment, even for remote staff, and provide clear procedures for reporting and filing claims. 

Who Needs Coverage?

You may need workers’ compensation insurance if your home-based business involves:

• Clerical or administrative staff
• Engineers, architects, or IT professionals
• Online retail operations with fulfillment staff
• Field-based roles like sales, real estate, or mobile services

Even if your team is fully remote, California law may still require you to carry coverage.

Protect Your Business and Employees

Workers’ compensation insurance provides protection covering medical expenses and lost wages for employees injured on the job. It also shields your business from potential lawsuits and significant financial penalties. California Contractor Bonds

Get a Quote Today

Guarantee that your home-based business complies with California's workers’ compensation laws. Contact us for a customized workers compensation quote and safeguard your business and employees.