Who must carry it in California
Every employer with one or more employees must carry workers' compensation under Labor Code section 3700; one part-time employee is enough.
Who counts as an employee
Family members, part-timers and most casual help count. Many licensed contractors must also file proof of coverage with the Contractors State License Board, in some classifications even before they hire. The label on the paycheck does not settle it: California applies its own employee test, and a worker who fails it is an employee for workers' compensation no matter what the contract says.
Owners, officers and LLC members
A sole proprietor with no employees is exempt. Corporate officers, directors and LLC managing members who own the business can waive coverage on a signed form when they meet the ownership tests. The election is made on the policy and affects both coverage and premium, so decide it before the policy is bound rather than at audit.
The day you hire
CoverMatch quotes workers' compensation from the first employee, with pay-as-you-go billing through most payroll companies where a carrier offers it, so the policy can start the week you hire without a large deposit. Add the policy to your wallet and the live certificate is ready for the general contractor or client who asks for proof.
If you go without
Operating without coverage is a misdemeanor; the Labor Commissioner issues stop orders and penalties, and an injured worker can sue the employer directly. The specific amounts and procedures are in the statute and on the agency page linked above; they change, and the licensed agent who reviewed this page checks them on each update.