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Workers’ Comp: The Exemption You Have to File
With anyone on the payroll, a C-36 plumbing contractor carries workers’ comp today — no headcount threshold, no grace period. Running solo, you may be able to claim the CSLB exemption, but only by filing it. Here’s the rule as it stands, the four ways it stops being yours, and the date it expires.
With a Crew It’s Mandatory. Solo, It’s a Filing.
California’s comp rule for a C-36 turns on one question — whether anyone works for you — and on a form most solo licensees have never sent.
Employ anyone in a manner that makes them subject to California’s workers’ compensation laws and your C-36 needs a comp certificate on file with the CSLB. There is no headcount threshold, no part-time carve-out, and no phase-in. One W-2 employee is enough.
Work with no employees at all and Business and Professions Code § 7125(b)(1) offers an exemption. It is real, and it is conditional: you get it by filing a statement with the board — the form is called Exemption from Workers’ Compensation Insurance — certifying that you do not employ any person in a way that brings you under those laws. Until that certification is filed, there is no exemption. There is a license with nothing on it.
This is where advice written for roofers goes wrong on a plumbing license. Roofers have carried this requirement for over a decade regardless of employees; plumbers have not. If someone tells you a solo C-36 must carry comp today, they are reading the C-39 rule off the wrong page.
The exemption has an expiration date
§ 7125 carries its own sunset: the section remains in effect only until January 1, 2028, and is repealed on that date. The successor version enacted by SB 1455 narrows the no-employee exemption to joint ventures only. A later statute could move the date again — SB 1455 already moved it once — but as the law reads today, the exemption a solo plumber files is a temporary one. That is a budgeting fact, not a scare: it is worth knowing what comp costs before it is the only option left.
So the honest version is two sentences long. If you have employees, this is a bill you already owe. If you don’t, you have a filing to keep current and a clock running behind it.
Four Ways It Stops Being Yours
The exemption is not a status you earn once and keep. Each of these ends it, and the first two can happen in a single week.
| You hire someone | A filed exemption is void the moment you employ anyone subject to California workers’ comp law, and proof of coverage has to reach CSLB Headquarters within 90 days of the hire. The clock starts at the hire, not at your renewal. |
|---|---|
| You hold a second class | § 7125(b)(2) removes the exemption from any licensee who also holds a C-8, C-20, C-22, C-39, or D-49. Plumbing and HVAC sit next to each other, so this is the version that catches C-36 holders. |
| You never filed it | The exemption in § 7125(b)(1) is conditioned on filing the certification with the board. No filing, no exemption — however few people work for you. It is sent to CSLB Headquarters, and CSLB also accepts it through its interactive-PDF service or by email. |
| January 1, 2028 arrives | § 7125 is repealed on that date by its own terms. The successor version enacted by SB 1455 keeps a no-employee exemption only for joint ventures. |
The C-20 problem is the one that catches plumbers
Plenty of C-36 holders add the C-20 so they can quote the furnace, the condenser, or the mini-split alongside the repipe. § 7125(b)(2) does not treat that as a partial change. Holding a C-8, C-20, C-22, C-39, or D-49 alongside your C-36 removes the no-employee exemption from the license itself — not just from the HVAC work. If a second classification is already on your CSLB record, or you are about to add one, comp is the first thing to price rather than the last. The same is true in reverse: dropping a classification to preserve an exemption is a licensing decision with revenue attached, and it deserves more thought than a form.
None of this is a reason to avoid the filing. It is a reason to treat the filing as something with a maintenance schedule: it reflects how you worked on the day you signed it, and your business does not hold still. The solo plumber’s walkthrough →
The Penalties Went Up. An Audit Is Coming.
SB 291 (Chapter 455, Statutes of 2025) did two things to this part of the code. Neither one moved the 2028 date.
- Minimum civil penalties, set in § 7125.4. For employing without workers’ compensation: $10,000 per violation for a sole owner licensee, and $20,000 per violation for a partnership, corporation, LLC, or tribal business licensee. Subsequent violations are not to exceed $30,000 in total per occurrence.
- Verification became an audit, in § 7125.7. The statute moved from “may include” to “shall include.” CSLB must establish a process — now mandatorily including an audit, proof, or other evidence — to verify that a licensee claiming no employees is actually eligible, and report that proposed process to the Legislature no later than January 1, 2027.
- What that means for a filed exemption. The certification you send is a statement the Legislature has now required CSLB to test. If how you actually work has drifted from what the form says — a helper on bigger jobs, a relative on the truck in summer — that gap is cheaper to close now than to explain later.
To be precise about where this stands: the CSLB has not published audit rules, and the deadline is still ahead. What exists today is a statutory requirement that the process be in place by January 1, 2027. Read it as a reason to keep your filing accurate, not as a knock on the door.
How Plumbing Comp Is Priced
No dollar figures here — just the machinery. Three things move a plumbing comp number more than anything else on the application.
| Payroll | Comp premium runs on payroll. What you pay out, and which classification each dollar of it sits in, decides most of the number before anyone looks at anything else. |
|---|---|
| The dual-wage threshold | A dual-wage hourly threshold applies to plumbing classifications. It moves, so we don’t publish one — we verify the current threshold at quote, against the plan in force on your effective date. |
| Where the payroll sits | Not everyone on a plumbing payroll turns a wrench, and the classification system is built to reflect that. We check the split rather than assume it, because payroll in the wrong place quietly pays the wrong rate for a full policy year. |
What you won’t find on this page is a rate. Your range needs a licensed producer’s eyes, your actual payroll, and the current threshold — and comp is usually the line where a guess costs the most. Start before your renewal month rather than during it: 877-940-4313.
Comp Questions, Straight Answers
Not automatically — but you are not exempt until you file. BPC § 7125(b)(1) lets a C-36 licensee with no employees claim the CSLB exemption only by filing a certification with the board, on the form named Exemption from Workers’ Compensation Insurance. Until it is filed, CSLB holds neither a comp certificate nor an exemption for your license.
Completely. BPC § 7125(b)(2) removes the exemption from any licensee who also holds a C-8, C-20, C-22, C-39, or D-49. Add the C-20 for the HVAC side of your work and the no-employee exemption is gone from the license — not just from the HVAC jobs.
§ 7125 repeals itself on that date. The successor version enacted by SB 1455 keeps a no-employee exemption only for joint ventures. It is a scheduled change in existing law rather than a mandate on you today, and a later statute could move it again — but as the section reads now, the exemption you file has an end date.
The Exemption Has a Deadline. Know the Number Before It Does.
Four taps and a market benchmark computed in the page — before any form asks who you are. If you’re at or under market, we’ll tell you to stay put.
This is a market benchmark, not a quote or offer of insurance — actual premiums are determined by carriers upon application. Aster National Insurance Group · CA Lic #0N10039.