What it means when a contractor is workers' comp exempt
By Contractor Lookout · Updated November 3, 2026
When a California contractor’s license shows workers’ comp as “Exempt,” the contractor has certified to CSLB that it has no employees, so it doesn’t carry a workers’ comp policy. That’s allowed for most license classes until January 1, 2028, when the general no-employee exemption ends.
Exemptions are common. In CSLB’s current file, 49.6% of licenses show an exemption, compared with 1.7% that show no current coverage at all.
What “Exempt” does and doesn’t tell you
An exemption is a statement by the contractor. It tells you the contractor says it has no employees. It doesn’t tell you who will actually work on your house.
That’s the gap worth watching. If an exempt contractor arrives with a crew, ask whether those workers are employees. The exemption is only for contractors with no employees.
Ask a direct question when you get the bid: “Will anyone besides you work on this job? Are they your employees or licensed subcontractors?” Write down the answer.
Exempt is not the same as none
The workers’ comp field can show three things, and two of them are easy to confuse.
| What you see | What it means |
|---|---|
| A policy | An insurer and policy number are on file |
| Exempt | The contractor certified it has no employees |
| Nothing on file | No current policy or exemption is on file |
An exempt license can still be Clear, because the exemption statement is on file with CSLB. A license with neither a policy nor an exemption on file is a different matter: a lapse in coverage or exemption leads to a workers’ comp suspension. If you see nothing at all, ask the contractor why before you go further.
Classes that can’t be exempt
Five classifications must carry workers’ comp whether or not they have employees. CSLB’s workers’ comp page lists them, and BPC 7125 sets the rule.
| Class | Covered since |
|---|---|
| C-39 Roofing | January 1, 2013 |
| C-8 Concrete | July 1, 2023 |
| C-20 HVAC | July 1, 2023 |
| C-22 Asbestos Abatement | July 1, 2023 |
| C-61/D-49 (a C-61 subcategory) | July 1, 2023 |
If a license in one of these classes shows “Exempt,” that’s a red flag worth asking about. Look the license up live on CSLB, since our weekly file can lag.
The 2028 change
Business and Professions Code section 7125 currently exists in two versions.
| Current version | Version operative January 1, 2028 | |
|---|---|---|
| No-employee exemption | Allowed, except for C-8, C-20, C-22, C-39 and D-49 | Ends |
| Remaining exemption | Not applicable | Only joint ventures under BPC 7029 with no employees |
| Status | Remains in effect only until January 1, 2028 | Becomes operative January 1, 2028 |
The 2028 rule started with SB 216 (Chapter 978, Statutes of 2022). SB 1455 (Chapter 485, Statutes of 2024), effective January 1, 2025, amended both versions and set the 2028 start date.
After January 1, 2028, nearly every active license will need a workers’ comp policy on file.
Verification by 2027
Before the 2028 change, CSLB has to check that exemptions are real. Under BPC 7125.7, as amended by SB 291 (effective January 1, 2026), CSLB must set up a process to verify no-employee exemptions by January 1, 2027.
What happens when an exemption lapses
An exemption has to stay current, just like a policy. If the contractor’s coverage or exemption lapses, BPC 7125.2 suspends the license automatically “by operation of law.” The record then shows workers’ comp suspended. A workers’ comp suspension pending note may appear first. CSLB doesn’t publish wording for that note, but the law lets it post a pending suspension for up to 45 days.
CSLB notes that a new certificate or exemption statement may have been received but not processed. Once it is, the suspension is lifted back to its effective date.
How to check
- Look up the license with our search, then open the live record on CSLB’s Instant License Check.
- Read the workers’ comp section. It shows a policy, “Exempt” or nothing.
- If it shows a policy, look up the insurer with CSLB’s Insurance Company Search and call to confirm.
- If it shows “Exempt,” check the classes against the table above and ask who will do the work.
- Recheck the license before each payment on a long job.
Our full walkthrough is in how to check a contractor’s workers’ comp. For the other checks, see how to check a contractor license and the hiring checklist.
This is general information, not legal advice.
Sources
- BPC 7125 (both versions), 7125.7 and related sections: https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=BPC&division=3.&title=&part=&chapter=9.&article=7.5.
- CSLB workers’ comp requirements: https://www.cslb.ca.gov/contractors/maintain_license/workers_compensation.aspx
- BPC 7125.2: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC§ionNum=7125.2
- CSLB Insurance Company Search: https://www.cslb.ca.gov/OnlineServices/InsuranceSearch/WCRequest.aspx