Glossary
Workers' Compensation
Also called: workers comp, workers' comp, work comp, WC insurance
Last reviewed September 16, 2026
The one-sentence answer
Workers' compensation is insurance that pays a worker's medical costs and lost wages if they are injured on the job — and California requires it of every employer with even one employee, including a family employing a single caregiver.
It is also one of the six components of employer burden, and the one that varies most between FMS providers.
What this means for you
There is no small-employer exemption, and no family exemption. California Labor Code section 3700 requires coverage from every employer with at least one employee — part-time, temporary, or a family member included. Caring for someone in their home is physical work; lifting injuries and back strains are among the most common claims in this kind of care.
Who actually carries the policy depends on your FMS model, and this is the practical question:
- Under Co-Employer, your FMS is a co-employer and workers' compensation is part of the burden rate applied to your workers' wages — it appears in your budget as a percentage, not as a policy you go out and buy.
- Under Sole Employer, you are the employer of record, and the policy is yours — you choose it, or your FMS helps you find one.
- Under Bill Payer you are not employing anyone, so the vendor or agency carries it for their own staff.
The Sole Employer version is frequently underestimated, and the published numbers show exactly why. On the DDS burden table, most Sole Employer entries list workers' compensation as "TBD" rather than a figure. The reason is straightforward: under that model you are the employer of record, so the policy is yours — you choose it, or your FMS helps you find one. Either way the premium depends on your policy rather than theirs, so the FMS cannot quote a rate for insurance it is not providing.
So "TBD" is not a small print detail — it is a cost that has moved onto you. A Sole Employer burden total can look several points cheaper than a Co-Employer one while leaving out a real and substantial expense you still have to pay for separately. Expect the rate you actually pay to differ from the figure the same FMS publishes for Co-Employer, and ask them what yours would really come to. If you are comparing the two models on cost, that is the line to look at first. See employer burden.
Confirm with your FMS who holds the policy before anyone starts work. Not after. Going without required coverage in California is a criminal misdemeanor, and an uninsured injury is the kind of event that ends a family's ability to keep self-directing.
For the detail-oriented
Source: California Labor Code section 3700; California DIR, Division of Workers'
Compensation, https://www.dir.ca.gov/dwc/faqs.html. Employers meet the requirement
either through a policy with a licensed insurer or through state-approved self-insurance.
Failure to secure coverage is a misdemeanor under Labor Code 3700.5.
Why it is the component that varies most. Across the FMS providers DDS publishes, workers' compensation runs from 1.56% to 9.18% — a wider spread than every other burden component combined. Rates depend on the insurer, the job classification code, and the provider's own claims history. That single line is where most of the difference between one provider's burden rate and another's comes from.
DDS names workers' compensation insurance as one of the six items employer burden "is limited to," alongside FICA, FUTA, SUTA, Employment Training Tax and paid sick leave.
Note: this entry describes the general California requirement and how the models differ in principle. Exactly who arranges and holds coverage in your arrangement is a question for your FMS, and arrangements differ between providers.
This entry is information, not legal advice.