California Workers’ Comp Changes September 1, 2026: What’s Changing for Employers?

What Changes on September 1, 2026?

The California Department of Insurance approved an average advisory pure premium rate of $1.65 per $100 of payroll, effective for policies incepting on or after September 1, 2026.

The approved figure is 6.6% higher than the September 1, 2025 approved average of $1.55.

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) had initially recommended an average advisory pure premium rate of $1.71, which would have represented a larger increase. The Insurance Commissioner ultimately approved $1.65.

The September changes also include updates to California’s Experience Rating Plan and classification rules.

For employers, there are therefore several separate issues to understand:

• The statewide advisory pure premium benchmark is changing.
• Experience rating rules are being updated.
• Certain classifications and payroll-related rules are changing.
• The effect on an individual company can differ substantially from the statewide average.

That last point is particularly important.

Does This Mean Workers’ Comp Premiums Are Increasing 6.6%?

No. A 6.6% increase in California’s average advisory pure premium rate does not mean every employer’s workers’ compensation bill will increase by 6.6%.

California’s advisory pure premium rates are benchmarks intended to reflect the cost of workers’ compensation losses and loss-adjustment expenses. They are not the final rates every insurer must charge businesses.

Insurance companies establish their own rates, and an employer’s premium can be affected by factors such as:

• Payroll
• Employee job classifications
• Claims and loss history
• Experience modification
• Type of business and its exposures
• Changes in operations
• Insurer underwriting and rating
• Applicable credits, debits, and other rating factors

Two businesses in the same city can therefore have very different workers’ compensation premiums.

For a business owner, the more useful question isn’t simply, “How much did the statewide benchmark change?”

It is: “How could the September changes interact with my business, classifications, loss experience, and upcoming renewal?”

Why Is California Changing the Advisory Pure Premium Rate?

The September adjustment comes amid increasing cost pressures in California’s workers’ compensation system.

In its 2026 decision, the California Department of Insurance noted rising medical costs and other system pressures when establishing the new benchmark.

This is also why the distinction between an advisory rate and an employer’s actual insurance premium matters.

Statewide workers’ compensation data can indicate the direction of underlying system costs, but it cannot predict what one particular San Diego restaurant, contractor, retailer, office, or other small business will pay.

Business owners should therefore be cautious about applying statewide percentage changes directly to their own policies.

Experience Rating Is Changing September 1, Too

The advisory pure premium rate isn’t the only September 1 change.

California is also implementing updates to the Experience Rating Plan.

Experience rating is designed to compare an employer’s actual loss experience with the expected loss experience for similar businesses. Qualifying employers may receive an experience modification, commonly referred to as an X-Mod or experience modification factor.

Beginning September 1, 2026, California’s experience rating eligibility threshold increases from $10,800 to $11,700.

Other experience-rating components are also being updated, including expected loss rates, D-ratios, and primary thresholds.

For many small business owners, there is no reason to become an expert in the underlying formulas. What matters is understanding that experience rating can play an important role in workers’ compensation costs for qualifying employers.

A business approaching renewal should know whether it is experience-rated and whether its loss history, payroll, or business operations have changed.

Will Your Workers’ Comp Premium Change After September 1?

There is no single answer that applies to every California employer.

The approved advisory pure premium rates apply to policies incepting on or after September 1, 2026, but the actual premium for an individual business depends on its circumstances and the insurer providing coverage.

That means business owners shouldn’t assume either that their premium will increase by the statewide percentage or that the September changes will have no effect on them.

Instead, employers approaching a renewal should look at the factors that actually influence their policy.

What Should California Employers Review Before Their Next Renewal?

Before renewal, consider reviewing:

• Payroll records. Is the payroll information being used for the policy still accurate?
• Employee classifications. Have employees changed roles, or has the company added new types of work?
• Claims history. Have there been claims or workplace incidents that could affect the business’s insurance profile?
• Experience modification. If the business is experience-rated, does the current X-Mod accurately reflect its experience?
• Operational changes. Has the business expanded, opened another location, added services, or changed how employees perform their work?
• Coverage and policy details. Does the existing workers’ compensation arrangement still fit the company as it operates today?

A renewal review isn’t necessarily about finding the cheapest policy. The objective should be making sure the information used to insure the company is accurate and that the coverage remains appropriate for its current operations.

What About General Liability Insurance?

Workers’ compensation and general liability are sometimes confused, but they address different types of risk.

Workers’ compensation generally addresses work-related employee injuries and illnesses, while general liability insurance addresses certain third-party bodily injury, property damage, and related liability exposures.

A change to California workers’ compensation rules doesn’t replace or eliminate a company’s need to evaluate its other commercial insurance coverage.

Business owners who are unsure where one policy ends and another begins can review the differences before making coverage decisions.

Does the September 1 Change Affect Existing Workers’ Comp Policies?

The approved September 2026 advisory pure premium rates apply to workers’ compensation policies incepting on or after September 1, 2026.

That does not mean every existing policy automatically changes on September 1.

How the regulatory changes relate to a particular employer will depend on factors including the policy’s effective dates, insurer, rating information, and individual business circumstances.

Employers with renewals approaching September 1 or later may want to review their policy information ahead of time rather than waiting until the renewal is due.

Frequently Asked Questions