Daily California Business Law Information #1

Business Law for Family Members and Minors

Q. Is Workers Compensation Insurance required for everybody?

A. Yes, every California employer using employee labor, including family members,

must purchase Workers’ Compensation Insurance (Labor Code Section 3700). If you fail

to have Workers’ Compensation Insurance for your employees, it can be expensive as the

DLSE is required to issue and serve a stop order/penalty assessment prohibiting further

use of employee labor until you do purchase Workers’ Compensation Insurance. The

penalty assessed for failure to have Workers’ Compensation Insurance is $1000 per

employee employed at the time the citation is issued. The citation amount increases to

$1,500 per employee effective January 1, 2010. However, there are exceptions for

partnerships, if the only persons performing labor are the partners and corporations where

the corporate officers are the sole shareholders; in which case, the corporation, officers

and directors come under the Workers Compensation provisions only by election.

Q. Can a family member help in my business for a few hours a day, without been considered an employee?

A. No, under the labor law she is considered an employee. An employee is defined as

someone you engage or permit to work. Even though your niece is part of your family,

she is considered an employee and you, as the employer, must provide Workers’

Compensation Insurance to cover her in case of a work-related injury. In addition, you

are also required to pay the minimum wage unless the employee is your spouse, parent or

child and you are a sole proprietor or partnership. Corporations do not have children and

therefore, no family relationship to the officers of the corporation can be exempt from

these requirements.

Q. I would like my minor son to work at my business. Does he need a work permit and what hours may he work?

A. Yes, even if the worker is a family member, a work permit is required for a minor.

Work permits for minors are available at the minor’s school. The number of hours a

minor is allowed to work will be indicated on the work permit. However, when school is

in session all work hours must be outside school hours, and a 15-year-old may work 3

hours on a school day, 8 hours on a non school day and no more than 18 hours per week.

When school is not in session, a 15-year-old may work 8 hours a day/40 hours a week.

You should also be aware that minors may not be employed in any business, exhibition or

vocation that would be hazardous or dangerous to the health, life or limb of the minor