Workers’ Compensation – What It Is and Why You Need It

hospital with ambulance parked next to the building

If you’re a real estate broker managing a team of real estate professionals, you have a duty of care to protect your team. Have you considered what might happen if one of your team injures themselves in the course of their work? Are you abiding by the workers’ compensation laws in your state? Do you have adequate protections in place to ensure your real estate business is safe from liability? 

In this blog, we explore what workers’ compensation is, who needs it, what the benefits are of having it and how you can check the level of protection you have for your team. 

What is Workers’ Compensation?

Workers’ compensation is designed to pay the expenses of employees who are injured, harmed or affected by a work-related illness in the course of their work. This includes lost wages throughout their recovery period, disability payments, medical and rehabilitation expenses, and even retraining. In the unfortunate case of a fatality in the workplace, an employee’s family can access compensation for the death of their loved one.

Workers’ compensation is governed predominantly by state laws. Employers pay mandatory contributions to maintain adequate coverage. In the case of a claim, it’s considered a request for benefits and treated in a similar fashion to an insurance claim. It does not involve the employee suing their employer. 

Who Needs Workers’ Compensation Coverage?

Most states require employers to have workers’ compensation for employees. There are also special workers’ compensation laws for federal government employees and others working in specific types of industries. 

Obligations do differ quite considerably from state to state. You can check your state’s laws here. In some states, your obligations to have workers’ compensation will vary according to whether your team members are considered employees or independent contractors. But, in California, the state requires coverage for real estate agents, even if they’re working for you as independent contractors or 1099 employees. 

The penalties for failing to comply with state workers’ compensation laws are significant. In California, you could be issued a stop order prohibiting the use of employee labor until coverage is obtained. You could also face hefty fines of up to $100,000. 

The Benefits of Workers’ Compensation Coverage

The major benefit of having workers’ compensation coverage is that you comply with your state’s laws and avoid penalties and legal ramifications arising from non-compliance. However, there are other benefits.

When you have workers’ compensation coverage and one of your team is injured or harmed in the course of their work, you will not have to face litigation and pay costly damages. Your mandatory contributions towards workers’ compensation will cover all of the employee’s medical and other expenses arising from their injury or work-related illness. 

Workers’ compensation effectively avoids costly lawsuits for employers. It protects your brokerage against major claims and excessive legal costs, which, without coverage, could potentially bankrupt your business. 

Brokers should recognize, however, that there are some exceptions in each state, which do allow workers to file for damages and bypass workers’ compensation laws. In California, for example, there are 5 exceptions to the “exclusive remedy rule”. These are:

  1. Dual Capacity
  2. Fraudulent Concealment
  3. Employer Assault or Ratification
  4. Power Press
  5. Uninsured Employer

In these circumstances, an employee can lawfully launch a lawsuit against their employer. 

Workers’ compensation also covers rehabilitation and retraining, which can be of great benefit to employers. This can allow you to keep efficient and high-performing employees and utilize their skills in a different area. You’ll reduce staff attrition and turnover and retain valuable corporate knowledge among your team.

Find Out More About Workers’ Compensation Coverage

To find out more about workers’ compensation and ensure your compliance with state laws, contact CRES Insurance. CRES offers insurance packages specifically for the real estate industry, and has more than 20 years experience working with real estate brokers just like you. 


Rates for workers’ compensation coverage are competitive, starting at 25 cents per $100 of payroll for the real estate class and 27 cents per $100 for the mortgage brokering class. CRES has access to multiple insurance carriers, so you can be sure your workers’ compensation coverage will be at the best possible rates. 

Contact us at 800-880-2747 for a confidential discussion today, and let our team tailor a workers’ compensation insurance solution to suit the specific needs of your real estate business. 

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published March 25, 2020

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