What should a California contractor prepare for a Workers' Compensation review?

Prepare the business name, license or trade information, employee and payroll details, operations, vehicles or equipment when relevant, contracts, prior coverage, and claims history. A licensed team member can then review the request subject to carrier eligibility, policy terms, and underwriting.

How are Workers' Compensation limits or terms selected for a contractor?

Limits and terms are not universal. They can be influenced by the contractor's actual work, contracts, employee duties, vehicle use, project requirements, prior loss history, carrier guidelines, and applicable California requirements. The appropriate structure must be reviewed for the individual operation.

Can Asena provide an exact price or guarantee coverage for this page?

No. Any indication is preliminary until complete information is reviewed. Availability, pricing, limits, effective dates, certificates, and coverage are subject to carrier eligibility, policy terms, underwriting, and written confirmation.

AB 5 and Workers Comp for California Contractors

Quick Answer

Assembly Bill 5 (AB 5) codified the ABC test for worker classification in California. A worker is presumed an employee unless: (A) free from control, (B) performing work outside the hiring entity's usual business, AND (C) customarily engaged in independent business. Failing any one of the three makes the worker your employee — for wage/hour AND workers' comp. Call (858) 925-9555 for help structuring sub relationships properly.

The Three Prongs

A — Free from control: The sub controls how, when, and where the work is done. You give them the result, not the method.

B — Outside your usual business: The sub's services are different from what your business primarily does. A roofing company hiring a "roofer" sub fails Prong B almost automatically.

C — Independent business: The sub holds their own CSLB license, has their own insurance, advertises to other clients, has employees of their own, etc.

Why Prong B Is the Killer

For contractors, Prong B is hardest to satisfy. If you're a roofing GC and you hire a 1099 roofer, the work IS your usual business — so the sub fails the test and becomes your employee.

Workaround: California's "construction trucking" and "B2B" exceptions allow some flexibility — but only if every condition is met (proper licensing, separate business, no work for the GC's home office, etc.).

How This Interacts With WC

AB 5 reinforces the §2750.5 presumption. If the sub fails the ABC test: - They're your employee for wage/hour - They're your employee for WC - You owe back wages, OT, and penalties - Your WC policy may pay an injury claim — and your audit will add the payroll

How to Reduce Risk

Only hire subs who hold their own CSLB license in the work scope
Collect a COI showing active WC every time
Pay by the project, not by the hour
Don't dictate work methods, hours, or equipment

Sub structure risk? Call (858) 925-9555.

Call (858) 925-9555 — sub structure guidance.