How to Get a Home Care Organization License in California

To get a Home Care Organization license in California, you file Form LIC 401 with the California Department of Social Services (CDSS), pay a $5,603 application fee, and prove you carry general and professional liability insurance of at least $1 million per occurrence and $3 million aggregate, workers’ compensation for every caregiver, and a $10,000 employee dishonesty bond. Every owner, officer, and administrator submits fingerprints for a state and FBI background check, and CDSS may inspect your administrative office before issuing the license. The framework comes from the Home Care Services Consumer Protection Act, which took effect in January 2016 and covers any business that sends caregivers into clients’ homes to help with non-medical tasks like bathing, dressing, and meals.¹

Who Has to Get Licensed

If your business employs caregivers and dispatches them to clients’ homes for pay, you need a Home Care Organization (HCO) license. The rule applies regardless of legal form: corporations, LLCs, partnerships, and sole proprietorships all fall under it. Each franchise location must hold its own license; the parent company’s does not cover them. Out-of-state companies must get licensed in California before sending any caregiver across the state line.¹

Two situations sit outside the HCO framework and are worth naming so you don’t apply for a license you don’t need. A family or individual who privately hires a caregiver directly, with no organization in the middle, is not subject to HCO licensing.² An independent caregiver who works directly for clients on their own does not need an HCO license either, but must register individually as a Home Care Aide with CDSS and pass a background check.³

What You Need in Place Before Applyingh2>

CDSS will not issue a license until you can document each of the following. Line these up first, because the application asks for proof of every one.

Liability Insurance

You must carry general and professional liability coverage of at least $1 million per occurrence and $3 million in aggregate.⁴ The policy needs to be active when you apply and stay active for the life of the license.

Workers’ Compensation

Every caregiver on your payroll must be covered by workers’ compensation, and your proof of coverage has to include the policy number, effective and expiration dates, and the carrier’s name and address.⁴

Employee Dishonesty Bond

You need an employee dishonesty bond with third-party coverage of at least $10,000, written by a licensed surety.⁴ The bond covers a client’s financial losses from theft, fraud, or other dishonest acts by your caregivers.

Administrative Office and Written Policies

Care is delivered in clients’ homes, but your organization needs a physical administrative office in California where personnel files, training records, client agreements, and background check documentation are stored. Inspectors have to be able to reach the office and confidential records must be kept secure. You also need written policies covering client rights, emergency procedures, and infection control.

Filing the Application

The application is CDSS Form LIC 401, the Home Care Organization License Application. Along with the form, you submit proof of your business registration with the California Secretary of State, ownership details, and the names of all corporate officers, partners, or members, plus your insurance certificates, workers’ compensation proof, and dishonesty bond.⁵

Every person listed on the application — owners, officers, and the designated administrator — submits fingerprints for a background check through the California Department of Justice and the FBI. CDSS reviews your written hiring practices, training protocols, and client service agreements. If reviewers spot deficiencies, you get a window to correct them before the application is denied.

CDSS may also inspect your administrative office before granting the license. Inspectors look at how confidential records are stored, whether documentation is organized and accessible, and whether your actual operations match what the application describes.

Fees

The HCO application fee is $5,603, and the license runs for two years.⁶ The fee is non-refundable and covers processing and background checks on owners and administrators. Related fees include:

Home Care Aide registration: $35 per aide, valid for two years
Change of location: $100
Change of corporation: $200

CDSS does not publish a separate renewal fee for HCOs. Plan to budget the full license fee at each two-year renewal, plus costs for updated background checks on any personnel added since the last cycle.

Registering and Training Your Caregivers

Getting the organization licensed is only half the picture. Every caregiver you employ must be registered as a Home Care Aide with CDSS and must pass a fingerprint-based criminal background check through the California Department of Justice and the FBI.³ Convictions involving abuse, fraud, or violence can permanently disqualify a person from working as a caregiver.

Before a caregiver can be alone with a client, they must complete five hours of entry-level training: two hours of orientation on their role and employment terms, and three hours on basic safety, emergency procedures, and infection control. Five additional training hours are required every year to keep the HCA registration active.⁷

The organization, not the caregiver, is responsible for verifying all of this and keeping current records of every worker’s background check result, training completions, and HCA registration status. Those records are among the first documents CDSS reviewers ask for on inspection.

Renewal and Ongoing Inspections

The license must be renewed every two years. Renewal requires updated documentation showing you still meet every requirement: active insurance, an active dishonesty bond, current caregiver background checks, and complete training records. If the license lapses before renewal is processed, you cannot legally operate.¹

Between renewals, CDSS conducts scheduled and unannounced inspections through its Home Care Services Branch, which also processes applications and responds to complaints.¹ Inspectors review administrative records, caregiver training logs, insurance documentation, and client service agreements. Gaps in the files are treated as violations.

Wage, Tax, and Overtime Rules You Take On

Getting the HCO license also makes you an employer, and this is where new owners often stumble. Because your organization dispatches caregivers to clients, sets schedules, and provides training, the caregivers are employees rather than independent contractors under the IRS test, which looks at behavioral control, financial control, and the nature of the working relationship.⁸

As of January 1, 2026, California’s minimum wage is $16.90 per hour for all employers, and some cities and counties set higher local minimums.⁹

On the federal side for 2026, you owe Social Security tax at 6.2% and Medicare tax at 1.45% on caregiver wages, each split evenly between employer and employee, with a Social Security wage base of $184,500. Federal unemployment (FUTA) tax runs at a net rate of 0.6% on the first $7,000 in wages per employee, assuming California unemployment contributions are paid on time. Each employee needs a W-2 by February 1, 2027, and household employment taxes are reported on Schedule H with your federal return by April 15, 2027.¹⁰

One point that trips up new operators: the Fair Labor Standards Act’s “companionship services” exemption from overtime does not apply to home care organizations. Under federal rules updated in 2015, third-party employers such as staffing agencies and HCOs must pay minimum wage and overtime to their caregivers, even if the duties would otherwise fit the companionship definition.¹¹ Misclassifying caregivers to skip overtime is a common route to a wage-and-hour lawsuit.

Penalties for Operating Without a License or Out of Compliance

If CDSS finds you providing home care services without a license, it sends written notice and assesses a civil penalty of $900 per day for each day the violation continues. The Attorney General, district attorney, or city attorney can seek a cease-and-desist order and an injunction if you fail to comply within 20 days.¹² A month of unlicensed operation runs to $27,000 in penalties before any other enforcement moves.

Licensed HCOs that violate the Home Care Services Consumer Protection Act face fines of up to $900 per violation per day, running from the date the violation is identified until it is corrected or the license is suspended or revoked. CDSS issues written notice specifying the violation, the applicable statute or regulation, and the possible consequences, which can include a required corrective plan, monetary penalties, or license suspension and revocation.

Willful or repeated violations of the licensing law are a misdemeanor punishable by a fine of up to $1,000, up to 180 days in county jail, or both.¹³ Falsely representing yourself as a registered Home Care Aide is a separate misdemeanor. Owners or administrators who engage in more serious fraud, such as falsifying background checks, misrepresenting services to clients, or stealing from vulnerable adults, can face felony prosecution under California’s grand theft and forgery statutes.¹⁴ Cases involving elder abuse or financial exploitation may be referred to the California Attorney General’s Office.

1
Department of Social Services. Home Care Services
2
California Legislative Information. California Health and Safety Code 1796.15
3
Department of Social Services. Home Care Aide Application Process
4
California Legislative Information. California Health and Safety Code 1796.37
5
California Department of Social Services. LIC 401 – Home Care Organization License Application
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California Department of Social Services. Application Fees
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California Legislative Information. California Health and Safety Code 1796.44
8
Internal Revenue Service. Independent Contractor (Self-Employed) or Employee?
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California Department of Industrial Relations. Minimum Wage
10
Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide
11
U.S. Department of Labor. Fact Sheet 79A – Companionship Services Under the Fair Labor Standards Act (FLSA)
12
California Legislative Information. California Health and Safety Code 1796.35
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California Legislative Information. California Health and Safety Code 1796.58
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California Legislative Information. California Penal Code 487