California SB 216: Workers’ Comp Deadlines and CSLB Penalties

California’s SB 216 requires nearly every licensed contractor in the state to carry workers’ compensation insurance, ending the long-standing exemption for license holders with no employees. High-risk trades lost the exemption on July 1, 2023, and the mandate becomes universal on January 1, 2028 after a two-year extension passed in 2024.¹

What SB 216 Changed

Before SB 216, a California contractor with no employees could file a simple certificate of exemption with the Contractors State License Board and hold an active license without workers’ compensation coverage. SB 216, signed in 2022, closes that door. Once the law is fully operative, every licensed contractor and every license applicant must obtain and maintain workers’ compensation insurance to hold an active license, regardless of trade or whether they have employees.¹

The only carve-out is for joint ventures organized under Business and Professions Code Section 7029 that have no employees and file a certificate of exemption with the CSLB. Sole proprietors, single-member LLCs, and partnerships without employees do not qualify for any ongoing exemption once the universal mandate takes effect.

The Dates That Matter

The rollout is phased, and the phase you fall into depends on your license classification.

Contractors in five higher-risk classifications have been required to carry workers’ compensation insurance since July 1, 2023, regardless of employee status:

C-8 Concrete
C-20 Warm-air heating, ventilation, and air conditioning
C-22 Asbestos abatement
C-39 Roofing
D-49 Tree service

If you hold one of these classifications and do not have a valid certificate of workers’ compensation insurance on file, the CSLB registrar removes that classification from your license. Operating with employees after the classification is removed, still uninsured, triggers automatic suspension of the entire license.¹

Every other classification was originally scheduled to lose the no-employee exemption on January 1, 2026. In 2024 the Legislature passed SB 1455, which pushed that universal deadline to January 1, 2028. SB 1455 also directed the CSLB to have a verification process in place by January 1, 2027, including audits or other methods for confirming that a contractor claiming no employees actually qualifies.²

The extension buys time; it does not change the outcome. On January 1, 2028, the no-employee exemption disappears for everyone outside the joint venture carve-out.

If You Still Qualify for the Exemption

Until January 1, 2028, a contractor outside the five listed classifications who has no employees can still file a certificate of exemption through the CSLB’s online portal.³ Only an owner, partner, officer, director, member, or manager listed on the license can submit the form. If the license qualifier is a Responsible Managing Employee rather than a Responsible Managing Officer, the exemption is not available.⁴

The exemption becomes invalid the moment you hire anyone. From that point you have 90 days to obtain workers’ compensation coverage and file proof with the CSLB.⁵

Filing Proof of Coverage with the CSLB

When you carry coverage, your insurer files the certificate directly with the CSLB. To be accepted, the certificate must:

Be issued within 90 days of the date the CSLB receives it
Show a business name that matches your CSLB license record exactly
List the CSLB as the certificate holder
Include your license number
Come from a carrier on the CSLB’s approved list

Name mismatches between the certificate and the license record are one of the most common reasons filings get rejected. If you use a professional employer organization or staffing company, the CSLB requires an addendum documenting that relationship, and those certificates are reviewed manually rather than submitted online. You do not have to resubmit annually at renewal unless ownership, business entity, or staffing provider changes.⁶

The CSLB checks formatting, names, and carrier authorization, but it does not verify the accuracy of the workers’ compensation classification codes your insurer reports.⁵ Those codes still drive your premium, so it’s worth confirming with your insurer that they reflect the work you actually perform.

What Happens If Coverage Lapses

The consequences of going uninsured when coverage is required stack on top of each other.

Automatic License Suspension

Under Business and Professions Code Section 7125.2, a contractor’s license is automatically suspended by operation of law the moment required workers’ compensation coverage lapses. There is no grace period. The suspension takes effect on the date coverage lapses or the date coverage was first required, whichever comes first. The CSLB sends notice of the reason and reinstatement steps, but the license cannot be reinstated without proof of valid coverage.⁷

Criminal Penalties

Knowingly operating without required workers’ compensation coverage is a misdemeanor under California Labor Code Section 3700.5. A first conviction carries up to one year in county jail, a fine of double the premium the contractor should have been paying (minimum $10,000), or both. A second conviction raises the fine to triple the premium, minimum $50,000.⁸

Civil Penalties Under SB 291

SB 291, passed in 2025, adds civil penalties aimed specifically at contractors who employ workers without valid coverage. Sole proprietors face a minimum of $10,000 per violation. Corporations, LLCs, and partnerships face $20,000 per violation. Repeat offenders can be fined up to $30,000. The CSLB cannot renew or reinstate the license until the contractor proves valid coverage is in place.⁹

Don’t Try to Solve This by Calling Employees Contractors

The whole SB 216 framework turns on whether you have employees, which makes worker classification the pressure point. Labeling employees as independent contractors does not eliminate the workers’ compensation obligation. If the CSLB or another agency finds that your workers are actually employees, the full range of penalties applies, along with exposure for any injuries that went uncovered.

California uses the ABC test established by Assembly Bill 5, which is generally stricter than the federal three-factor analysis the IRS applies.¹⁰ If you control when, where, and how someone works, they are likely your employee regardless of what the contract calls them.

This is the part contractors most often misjudge. Filing a certificate of exemption while directing workers you treat as employees exposes you to license suspension, criminal charges, and SB 291’s civil penalties. The verification and audit procedures the CSLB must have in place by January 1, 2027 are designed to catch exactly that situation.²

1
California Legislative Information. California Senate Bill 216 – Contractors: Workers’ Compensation Insurance: Mandatory Coverage
2
California Legislative Information. California SB-1455 – Contractors: Licensing
3
California Legislative Information. California Business and Professions Code 7125
4
Contractors State License Board. Exemption from Workers’ Compensation Insurance
5
Contractors State License Board. Workers’ Compensation Requirements
6
Contractors State License Board. CSLB Certificate of Insurance Requirements
7
California Legislative Information. California Business and Professions Code 7125.2
8
Justia Law. California Labor Code 3700-3709.5
9
Workers’ Compensation Insurance Rating Bureau of California. 2025 California Legislation Summary
10
Internal Revenue Service. Worker Classification 101: Employee or Independent Contractor