Published June 10, 2026 · Last updated June 10, 2026

Workers' Comp With No Employees: SB 216 and Ghost Policies for California Tree Services

Since January 1, 2023, SB 216 requires California tree service contractors (formerly C-61/D-49, now C-49) to carry workers' compensation insurance even with no employees; CSLB does not accept the exemption form from this classification. Solo operators typically comply with a minimum-premium policy - a "ghost policy" - with the owner excluded and $0 reportable payroll.

Yes - if you hold a California tree service license, you need workers’ compensation insurance even if you have never had an employee and never plan to. Since January 1, 2023, California tree service contractors (C-61/D-49, now C-49) must carry workers’ compensation insurance even with no employees, under SB 216 (2021). The exemption form other solo contractors file does not exist for your classification. CSLB will not issue or renew the license without proof of coverage, and a lapse suspends the license automatically.

That leaves solo operators buying a policy that, on day one, covers nobody. It feels absurd. It is also the law, it is enforced by computer rather than by inspector, and there is a standard, legitimate way to satisfy it: what brokers call a ghost policy. This article explains what that policy actually is, how owner exclusions work for each entity type, what skipping it costs, and where the rules go in 2028. California rules only - none of this transfers to other states.

Why do California tree contractors need workers’ comp with no employees?

Most California contractors who work alone can file a CSLB exemption form certifying they have no employees. Tree contractors cannot. SB 216 (2021) singled out four classifications - C-8 Concrete, C-20 HVAC, C-22 Asbestos Abatement, and the D-49 tree classification - and required them to carry workers’ comp regardless of employee count, effective January 1, 2023, per the California Legislature and State Fund’s explainer on the bill. When CSLB replaced D-49 with the C-49 Tree and Palm classification on January 1, 2024, the requirement carried over.

Today, CSLB does not accept workers’ comp exemptions from C-8, C-20, C-22, C-39, and C-61/D-49 (now C-49) license holders. (C-39 Roofing was made mandatory by earlier legislation, not SB 216.) Per CSLB, a license qualified by a Responsible Managing Employee cannot file the exemption either. SB 216 left one narrow carve-out: a qualifying joint venture that files a certificate of exemption is not required to obtain coverage, per the chaptered bill text. That exception is narrow enough that we have never used it for a tree client.

Why tree work? The Legislature did not consult us, but the class data tells the story. WCIRB’s pure premium rate for class 0106 (tree pruning, repairing or trimming) is $9.91 per $100 of payroll effective September 1, 2024; specialty broker reporting puts the September 1, 2025 advisory rate at $11.24. Compare the statewide average of $1.52 per $100 approved for September 1, 2025, per the Insurance Commissioner’s decision. Tree work’s expected claim costs run at several times the all-industry average, and “no employees” claims in high-hazard trades have a way of meeting uninsured groundmen at claim time. The mandate closes that gap.

What is a ghost policy in California?

“Ghost policy” is broker slang, and no carrier will sell you anything by that name. What you are buying, formally, is a minimum-premium workers’ compensation policy in which the owner is excluded (or, for a sole proprietor, simply is not an employee), leaving $0 reportable payroll. The policy exists, the certificate files with CSLB, the license stays active - and until someone is on payroll, the policy covers no one.

The mechanics, per State Fund’s minimum-premium policy page: every workers’ comp class code carries a minimum premium, and when the calculated premium falls below that floor, you pay the minimum. It varies by class code, it is paid up front at inception, it does not prorate if you cancel early or run a short term, and the final premium is trued up at the end of the term against your actual payroll. Rates behind minimum premiums are approved by the state insurance regulator. So the structure of a ghost policy is just an ordinary comp policy hitting the floor of its pricing.

What does it cost? We are not going to quote a number, and you should be skeptical of websites that do. Minimum premiums vary by class code and carrier, and class 0106 sits at the expensive end of California’s rate table. The figures floating around online trace back to broker marketing pages, not rate filings. Get an actual quote against your actual classification - it is a quick request, not a project.

Two honest warnings, because this is where ghost policies go wrong:

It is not a coverage strategy. It is a compliance strategy. If anyone helps you on a job - a day laborer, a friend on the ropes, a “1099 groundman” who looks like an employee under California law - the true-up audit and any claim will treat that payroll as payroll. The policy responds, and then the premium does too, retroactively.
It only works if the exclusion paperwork matches your entity. Which brings us to the rules.

Which owners can be excluded from workers’ comp in California?

Whether and how an owner comes out of coverage depends entirely on how the business is structured. Per State Fund’s summary of the current Labor Code rules:

Sole proprietor, no entity. Simplest case. A sole proprietor is not an employee in the first place, so there is nothing to waive. The SB 216 policy must still exist for the license - it just covers no one until you hire.
Corporation. An officer or director may waive coverage if they own at least 10% of the stock - or at least 1% if a direct relative (parent, grandparent, sibling, spouse, or child) owns at least 10% and the officer is covered by a health insurance policy.
Sole-shareholder corporation. The exclusion is automatic unless the owner opts in to coverage.
LLC. Managing members may waive coverage, with no ownership threshold.
Partnership. General partners may waive coverage.

All waivers are signed under penalty of perjury and take effect when the carrier receives and accepts them, per State Fund. That last clause matters: the waiver is not effective when you sign it, but when the carrier accepts it. Bind first, then confirm the exclusion landed.

Note what this means for your premium, too. An owner who does not (or cannot) qualify for exclusion is covered payroll, and at tree care rates that is real money. We have seen corporate officers under the 10% threshold get rated as climbers without anyone intending it. Entity structure, ownership percentages, and the exclusion forms need to agree with each other - this is a ten-minute conversation with your broker that can prevent a five-figure surprise.

What happens if you skip the workers’ comp policy?

The license suspends, and the suspension is mechanical, which makes it reliable. Carriers report coverage to CSLB directly - State Fund says it automatically sends proof of coverage to CSLB for contractors in all class codes when a policy is bound - and CSLB’s own page states: “Failure to maintain workers’ compensation insurance coverage will result in the license being suspended. Any work performed while the license is suspended is considered to be unlicensed and disciplinary action can be taken against you.” The suspension lifts only after acceptable proof is received and processed.

Walk the chain. No policy means a suspended license. A suspended license means every job you complete is unlicensed contracting - a misdemeanor under B&P section 7028 carrying up to six months in jail and/or a $5,000 fine on a first offense. It also means no valid certificate of insurance, which means no city permits and no commercial work; permit-level COI requirements are the norm, as we cover in certificates of insurance for tree work. And it puts a mark on your record that carriers ask about for years. We work with non-renewed and hard-to-place tree accounts all the time; “lapsed comp, kept working” is one of the harder stories to place.

One more deadline worth knowing: the moment you hire anyone subject to California workers’ comp law, any exemption a contractor had on file becomes invalid, and proof of coverage must reach CSLB headquarters within 90 days, per CSLB. For a C-49 holder with a ghost policy the license side is already satisfied - but tell your carrier about the hire anyway. The policy needs to know payroll exists, or the true-up audit will reconstruct it for you, on the auditor’s terms. Our workers’ comp page covers the with-employees side.

When do all California contractors need workers’ comp - 2026 or 2028?

January 1, 2028 is the real date. You will find articles claiming every California contractor needs workers’ comp “starting January 1, 2026.” That date is obsolete. SB 216 originally extended the workers’ comp mandate to all license classifications on January 1, 2026; SB 1455 (2024) moved that date to January 1, 2028. As of mid-2026, solo contractors in most other classifications can still file the exemption. Tree contractors never could, and the delay changes nothing for you.

What is moving right now is enforcement of the exemption everyone else uses. SB 291 (2025) created significant civil penalties for falsely claiming the exemption and requires CSLB to stand up a verification process, reporting to the Legislature by January 1, 2027, per the California Legislature and the USD Consumer Protection Policy Center. At CSLB’s March 2026 board meeting, Registrar David Fogt estimated about 9-10% of licensees would qualify for the no-employee exemption, and CSLB’s report proposes a dedicated workers’ comp enforcement unit, audits of roughly 5% of exemption filings each year, and a $500 exemption filing fee at each two-year renewal - proposals seeking a legislative author, not yet law, per the USD Consumer Protection Policy Center.

Our take: tree contractors were the test case for “everyone carries comp,” and the state liked the result well enough to extend it. If you have been carrying a ghost policy since 2023, the rest of the construction trades are about to join you. There is some grim satisfaction in that.

FAQ

Do I need workers’ comp if I’m the only person in my California tree service?

Yes. Since January 1, 2023, California tree service contractors (C-61/D-49, now C-49) must carry workers’ compensation insurance even with no employees, under SB 216 (2021). CSLB does not accept the exemption form from the tree classification, and the license suspends without proof of coverage on file.

What is a ghost policy?

Broker slang for a minimum-premium workers’ compensation policy in which the owner is excluded or is not an employee, leaving $0 reportable payroll. Per State Fund, minimum premium varies by class code, is paid at inception, does not prorate, and is trued up against actual payroll at the end of the term. The policy satisfies CSLB while covering no one until staff are hired.

How much does a ghost policy cost in California?

There is no standard price, and published figures generally trace to marketing pages rather than rate filings. The minimum premium depends on your class code and carrier, and tree care’s class 0106 is among California’s higher-rated classes. The only reliable answer is a quote against your actual classification and entity.

Can an owner be excluded from workers’ comp in California?

Often, yes. Per State Fund’s summary of the Labor Code rules: corporate officers can waive with at least 10% ownership (or 1% with a qualifying relative at 10% plus health insurance), sole-shareholder corporations are excluded automatically unless the owner opts in, LLC managing members and general partners may waive, and sole proprietors are not employees to begin with. Waivers are signed under penalty of perjury and take effect on carrier acceptance.

When do all California contractors need workers’ comp?

January 1, 2028. SB 216 originally set the all-classification mandate for January 1, 2026; SB 1455 (2024) moved it to January 1, 2028. Tree, concrete, HVAC, asbestos, and roofing classifications are already subject to it.

My workers’ comp lapsed - how do I get my license back?

CSLB suspends the license on lapse and lifts the suspension once acceptable proof of coverage is received and processed, per CSLB. Bind replacement coverage immediately and do not work in the gap - work performed while suspended is treated as unlicensed contracting. If carriers are declining you because of the lapse, that is a placement problem we handle; see our hard-to-place guide.

Where to go from here

If you are solo and unlicensed-but-applying, get the minimum-premium policy quoted before anything else - it gates the license. If you already carry one, check two things this week: that your exclusion form matches your current entity and ownership, and that the renewal date is on a calendar somewhere a lapse cannot sneak past. The broader requirements - bond, LLC rules, what clients demand on top - are in our California requirements guide and the C-49 license guide.

Solo operations are not too small for us to bother with. Get in touch and we will set it up properly once, so it does not become the interesting kind of problem.