Do I Really Need Workers Comp Coverage for My 10-99?

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For decades, business owners in California have been coming to Inszone looking for clarification on Workers Compensation coverage. Who needs to buy Work Comp? In a nutshell…all businesses in CA that have employees.

“My guys are independent contractors on 10-99 not employees, so I don’t need it.” A common misconception is if the person is 10-99, then the answer is a definite no on needing work comp. The State of California would disagree with that in most cases, and unfortunately that comes with harsh penalties.

Employee vs. Independent Contractor…how do I know? There are many different scenarios but it mainly boils down to who has the right of control?

  • Do you instructor supervise the person while he/she is working?
  • Can the worker quit or be discharged at any time?
  • Is the work being performed part of your regular business?


If the answer to these questions is yes, the worker is likely an employee.  

  • Does the worker have a separately established business?
  • Is the worker free to make business decisions which affect his or her ability to profit from the work?
  • Does the individual have a substantial investment in their job which would subject him or her to a financial risk of loss?


If the answer to these questions is no, the worker is likely an employee.

  • Do you have employees who perform the same type of work?
  • Do you furnish supplies such as tools, computers, supplies, business cards and phones?
  • Is the work considered unskilled labor?
  • Do you provide training?
  • Is the worker paid an hourly wage, salary or per the job?
  • Does the worker believe he or she is an employee?


If the answer to these questions is yes, the worker is likely an employee. What happens to an employer who doesn’t purchase Work Comp on a person CA deems an employee?

  • The Division of Labor Standards Enforcement has the authority to issue a stop order against any company who is discovered to be unlawfully uninsured.
  • Misdemeanor punishable by either fine of up to $10,000 or imprisonment in the county jail for up to one year, or both.
  • The State of CA may issue penalties of up to $100,000
  • Employers may be prosecuted for insurance fraud.


What happens if an employee is injured on the job and the employer is Uninsured?

  • The employer is responsible for paying all bills relating to the injury or illness
  • The employer may be sued civilly


Workers Comp laws are regulated by the State you do business in, not federally. While different state work comp laws vary, they are almost identical in concept. The bottom line is, if your state deems your worker is an employee and work comp isn’t in place…you’ve got problems. I recommend you reach out to the insurance experts at Inszone to discuss your situation. You’ll gain the right information, and make the right decision to protect your business.


Pat Grignon

Vice President

Inszone Insurance Services

Inc. Phone (866) 655-2551