Do You Need Workers’ Comp as a Sole Proprietor?
In most states, sole proprietors with no employees are exempt — but California requires workers’ comp for roofing, concrete, HVAC, asbestos, and tree service contractors, nearly every license from 2028, and most GCs won’t hire you without it.
In most states, a sole proprietor with no employees is exempt from carrying workers’ compensation. But there are two big exceptions: California requires it for C-8 concrete, C-20 HVAC, C-22 asbestos abatement, C-39 roofing, and C-61/D-49 tree service contractors even with zero employees, and most general contractors will refuse to hire you without it regardless of the law. California is also ending the exemption for nearly every license on January 1, 2028, under SB 216.
The General Rule
In Arizona, Nevada, and Texas, sole proprietors and owners with no W-2 employees are generally not required to carry workers’ comp for themselves. The requirement kicks in the moment you hire your first employee.
The California Roofing Exception
California requires every C-39 roofing contractor to carry workers’ comp — even a one-person operation. There is no sole-proprietor exemption for roofers. This is one of the most common reasons roofing licenses get suspended.
The same rule already applies to C-8 concrete, C-20 HVAC, C-22 asbestos abatement, and C-61/D-49 tree service licenses. Starting January 1, 2028, California ends the no-employee exemption for nearly every license class.
Why You Might Want It Anyway
- Most general contractors require a workers’ comp certificate before they let you on site
- It pays your medical bills and lost wages if you are hurt on the job
- A ghost policy (owner-excluded) satisfies the COI requirement at low cost