Workers' compensation insurance provides lost wages, medical benefits, and rehabilitation costs to employees injured "in the course and scope" of their job. By carrying the insurance, general pain and suffering damages, and punitive damages are not available to employees. With the insurance in place, employees do not have to sue to receive medical benefits.
The insurance is mandated by the state of California for all employers, even if the company only has one employee. Sole proprietors are generally exempt unless they are a roofer.
If an employer provides a safe work environment for employees so that employees do not suffer injuries, “experience rating” allows for lower insurance premiums. Those employers with high injury rates pay higher premiums. This provide incentive for employers to provide safe working conditions.
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