WCIRB Approves Dual Wage Threshold Increases for 2026: What California Contractors Need to Know

Author, Jeremy Hoolihan, Partner, Rancho Mesa Insurance Services, Inc.

The Workers’ Compensation Insurance Rating Bureau (WCIRB) has reviewed and approved a proposal to increase the hourly wage threshold for 13 out of the 16 dual wage classifications by $2 to $5 per hour that would go into effect September 1, 2026, once Insurance Commissioner Ricardo Lara agrees. 

This upcoming change could have a direct impact on your workers’ compensation premium, if you employ workers in any trade subject to the dual wage classifications.

There are 16 dual wage classifications that will affect California Contractors:  

Dual Wage Classifications	Curent Threshold Effective 2024	Recommended Threshold Change	Recommended Threshold
5027/5028 Masonry	$35	+$2	$37
5190/5140 Electrical	$36	+$4	$40
5183/5187 Plumbing/HVAC	$32	+$3	$35
5185/5186 Automatic Sprinkler Install	$33	+$3	$36
5201/5205 Concrete or Cement Work	$33	+$3	$36
5403/5432 Carpentry	$41	+$5	$46
5446/5447 Wallboard Install	$41	+$4	$45
5467/5470 Glaziers	$39	+$4	$43
5474/5482 Painting/Waterproofing	$32	+$4	$36
5484/5485 Plastering or Stucco Work	$38	+$4	$42
5538/5542 Sheet Metal	$33	+$4	$37
5552/5553 Roofing	$31	+$2	$33
5632/5633 Steel Framing	$41	+$5	$46
6218/6220 Excavation/Grading	$40	TBD	TBD
6307/6308 Sewer Construction	$40	TBD	TBD
6315/6316 Water/Gas Mains	$40	TBD	TBD

Data from the WCIRB’s Classification and Rating Committee Meeting on November 11, 2025.
https://www.wcirb.com/sites/default/files/2025-11/20251111_cr_presentation.pdf

In California, certain construction class codes use a dual wage system to separate employees into two tiers:

• Higher Wage – Workers earning at or above a set hourly threshold qualify for lower workers’ compensation rates because statistically these workers have lower claim frequency and severity.

• Lower Wage – Workers earning below the threshold qualify for in the higher workers’ compensation rates because they tend to be less experienced and have a higher frequency and severity of claims.

The WCIRB periodically adjusts these thresholds to reflect rising wages, inflation, and updated claims data. When wages increase across the industry but thresholds stay static, more employees drift into the higher wage threshold which creates an imbalance. Therefore, the WCIRB now reviews and adjusts the thresholds every two years.

In preparation for proposed wage threshold changes, business owners may want to consider implementing the following strategies:

1. Review your payroll and identify employees earning near the current dual wage threshold.

2. Model the impact and estimate how a $2 to $5 per hour increase could affect your premium classification mix.

3. Evaluate wage adjustments by comparing the cost of modest raises against the savings from qualifying for lower workers’ compensation rates.

4. Keep accurate records! Maintain clean timecards and payroll documentation for upcoming audits.

5. Talk with your broker now to help you analyze potential exposure and prepare for your 2026 renewal.

The WCIRB’s Classification and Rating Committee reviewed these proposed increases in a meeting on November 11, 2025 and has approved them as part of the Bureau’s regulatory filing next spring for Lara’s consideration. If accepted, the updated thresholds would apply to policies incepting on or after September 1, 2026.

For any questions relating to how the dual wage threshold increase will affect your workers’ compensation premiums, reach out to me at (619) 937-0174 or jhoolihan@ranchomesa.com.

A Proactive Approach to Insuring Your Commercial Property

Author, Jeremy Hoolihan, Partner, Rancho Mesa Insurance Services, Inc.

Wildfires in California over the last several years have had a dramatic effect on the insurance marketplace. With expected losses of the recent Los Angeles fires alone to exceed $30 Billion, insurance companies have been taking action to stop the bleeding. These actions include non-renewing policy holders in high hazard zones as well as pulling out of California all together. 

It is critical that property owners now take a proactive approach to prepare for their upcoming insurance renewals. Insurance companies have tightened up underwriting guidelines and are much more selective with the buildings they are willing to insure. Knowing what insurance companies are looking for and addressing these concerns in advance can be the difference between being insured in the standard marketplace or having to resort to the California FAIR Plan. 

Some of the top insurance concerns underwriters are currently facing include the following:

• Brush Clearing – It is commonplace for insurance companies to require a pre-inspection before offering an insurance quote. General maintenance such as weed abatement and brush clearing are two important tasks that can determine whether an insurance company is interested in insuring a building.

• Fire Zones in California, fire zones continue to grow as a result of climate change, urban expansion, and new technology such as AI modeling that provides a more accurate prediction of where high hazard zones exist.

• Building construction type also has a huge impact on an Underwriter’s appetite. A concrete building will obviously be more appealing than a wood framed building, especially in a mid to high level fire zone.

• Building Updates – Insurance companies now expect building owners to keep their buildings well maintained and up to date. Underwriters will inquire about the age of a building’s roofing, plumbing, electrical, HVAC and fire sprinkler systems. If a building is over 20 years old, replacement of any one of these systems is a common risk control requirement.

Knowing some of these challenges in advance, building owners can take proactive steps to make their building more attractive to underwriters.  Here are a few of those examples:

Property Maintenance

• Roof – Regular inspections and timely replacement is key, especially if the roofing material is fire-resistant.

• Electrical Systems – Upgrade outdated wiring and panels, especially if you have a Zinsco Panel. They have been known to spontaneously combust and will almost certainly cause carriers to decline offering a quote.

• Plumbing – Updating the plumbing system can prevent water damage claims. PEX or copper is preferred over galvanized steel or polybutylene.

• HVAC – Upgrading and/or regularly maintaining heating and cooling systems can help avoid fire and mold risks as well as creating a more efficient system.

• Fire Suppression System – Installing or upgrading sprinklers can often times determine if an insurance company is willing to insure a building.

Risk Mitigation Features

• Fire Alarms – Fire alarms, extinguishers, sprinkler systems, smoke detectors are critical features.

• Flood Protection – The installation of sump pumps and proper drainage systems are important, especially in flood zones.

• Security Systems – Monitored alarms, cameras, and controlled access points will help reduce theft.

Documentation and Compliance

• Inspection reports – Keep updated reports (i.e., roof, HVAC, electrical, fire) ready and available to show underwriters.

• Maintenance logs – Document routine maintenance. This helps to show that you are a responsible owner.

• Permits and certificates – Make sure upgrades are properly permitted and compliant so that you are able to provide evidence to the insurance underwriter.

While there is reform in the making to California’s property insurance marketplace, it continues to be very difficult to navigate.  By implementing many of these recommendations and being proactive as you approach your property insurance renewal window, you will improve your chances of securing the most competitive terms and pricing.

If you have any questions, I can be reached at (619) 937-0174 or jhoolihan@ranchomesa.com.  

Non-Owned Auto Can Be A Janitorial Company’s Hidden Nightmare

Author, Jeremy Hoolihan, Partner, Rancho Mesa Insurance Services, Inc.

It is common for employees of janitorial companies to drive their own vehicles, whether that is driving to various jobsites, transporting cleaning supplies, or simply running errands. For the janitorial company, this creates what is referred to as a non-owned auto exposure.

Often overlooked, non-owned auto liability arises when a business is held responsible for accidents caused by employees driving their personal vehicles while performing duties in the course of employment.

As inflation and nuclear verdicts drive up costs of individual auto liability claims, employers must be concerned not only with company-owned vehicles, but their employees’ vehicles being used on company time. If an employee causes an accident while driving their personal vehicle while on the clock, the injured parties may file claims against both the employee’s personal auto insurance and their employer.

To protect your company from non-owned auto liability, it is recommended that companies have an updated fleet safety program that includes the following:

• Employees using their personal vehicles on company time should be required to provide a copy of their MVR. It is critical that the employee’s MVR meets the same parameters as those driving company-owned vehicles.

• Employees who drive company and/or personal vehicles should be required to participate in the DMV Pull Program. This way, if an employee received a major moving violation (e.g., reckless driving, DUI, etc.), the company will be alerted.

• Require all company drivers who drive non-owned vehicles to purchase personal liability coverage. That way, damages of a claim are less likely to exceed the personal auto liability limit and fall on to the employer’s commercial auto liability policy. It is also recommended that employers require their drivers to purchase minimum limits of $300,000.

• Make sure the employee completes routine maintenance as per the car’s manufacturer on their personal vehicle, such as oil changes, tire checks, windshield wiper replacements, etc. This is just as critical as a maintenance program for company-owned vehicles.

• Provide regular fleet safety training to all employees driving company and personal vehicles during business hours.

• Finally, business owners may want to encourage employees to use safety features such as apps that prevent the driver from using their phone while the vehicle is in motion.

Janitorial businesses, in general, have a large non-owned auto exposure that can often be overlooked and leave a business vulnerable to high dollar auto claims, which can result in policy non-renewal and/or increased premiums.

Now is the time to review your current program’s policies and procedures with your insurance broker and make any adjustments necessary.

If you need any assistance reviewing your current program or have any questions, please feel free to contact me at (619) 937-0174 or jhoolihan@ranchomesa.com.  

Best Practices Approach to Insuring Janitorial Companies

Author, Jeremy Hoolihan, Partner, Rancho Mesa Insurance Services, Inc.

Running a successful janitorial company in California can often be cut throat. With low profit margins, janitorial companies continue to face daily challenges like increased wages and material costs, as well as aggressive competition that continues to under bid contracts. It is natural for business owners to explore ways of cutting costs to help their bottom line, but insurance should not be one of them. In fact, they should be looking to add coverages that are unique to janitorial operations and protect the long term health and viability of the company. 

Following are a few key coverages and endorsements to consider that could help insulate a janitorial business from serious losses.   

Crime Coverage (First and Third-Party)     

A commercial crime policy can insure a janitorial company from an employee stealing from them (i.e., a first-party crime). These types of claims include, but are not limited to, forgery or alteration, funds transfer fraud, credit card fraud, and computer fraud.

Third-party crime includes theft of a client’s property. Many janitorial companies have employees cleaning after hours. If property on the client’s premises goes missing, it’s often the janitor that gets accused. This is when 3rd party crime coverage comes into place.

Lost Key Coverage

If you are operating a janitorial company and your employee misplaced or lost a master key for one of your client’s properties, are you prepared to replace all the keys and locks? Depending on the number of locks to replace, your business could be out tens of thousands of dollars. Lost key coverage is typically an endorsement that can be added to a general liability policy. Limits and deductibles often vary, depending on the customer’s request. 

Limited Pollution Liability

With most janitors using chemicals, cleaning products, and power washers, it is highly recommended that the company has the limited pollution liability endorsement added to their policy (or better yet, a standalone pollution policy).  Coverage for accidental job site pollution that may arise from chemical spills and accidental water runoff could prove extremely valuable.

Cyber Liability

Janitorial companies often store clients’ information and process payments online for their customers. This can be very enticing for hackers. Which is why business owners should consider carrying a cyber liability policy that can insure the company for data breaches, cyber-attacks, cyber extortion, business interruption, computer fraud, and much more. 

Cyber-attacks can debilitate a business and bring it to a screeching halt. Cyber liability coverage can assist with keeping a business afloat during these very trying times.

Employment Practices Liability Insurance (EPLI)

EPLI insures a business when a current or former employee sues the employer for such things as wrongful termination, sexual harassment, retaliation, etc.  An EPLI policy can also insure a business if a non-employee sues the business for other similar harassments. With defense costs and settlements commonly reaching well over six figures, these claims can easily put a company out of business. And to top it off, even if a company is proven innocent, the cost of defense alone could jeopardize its financial stability.

At the end of the day, insurance is simply risk transfer. Businesses elect to either transfer the risk to an insurance company or self-insure it. The key is knowing what risk transfer options are out there and what they cost. It starts with partnering with an insurance broker that has expertise in your industry.

I’ve been specializing in insurance for the janitorial and construction industries for over 20 years. If you have any insurance related questions, I am here to help! Contact me at jhoolihan@ranchomesa.com or (619) 937-0174.

The Road to Recovery: Commissioner Lara's Plan to Rescue Property Insurance in California

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

California Governor Gavin Newsom recently declared property insurance a State of Emergency in CA based on a mass exodus of property insurance companies. This has allowed CA Insurance Commissioner Ricardo Lara to strike a deal with insurance companies to encourage new coverage in the State. The changes are slated to go into effect by the end of 2024. However, the hope is that insurers will begin to write homeowner’s policies sooner.

The agreement between Lara and the insurance industry will have insurers return to high-risk zones in the State, in exchange for relief in current regulations. This would allow insurers to get higher rate increases through the state regulator much faster.

Key regulatory elements of Lara’s plan, per his press conference on September 21, 2023, include:

1. Executive action by the Commissioner to transition homeowners and businesses from the FAIR Plan back into the normal insurance market with commitments from insurance companies to cover all parts of California by writing no less than 85% of their statewide market share in high wildfire risk communities. For example, if a company writes 20 out of 100 homes statewide, it must write 17 out of 100 homes in a distressed area.

2. Allowing FAIR Plan policyholders who comply with new safer wildfire regulations the first priority to transition to the normal market.

3. Expediting the Department’s introduction of new rules for the review of climate catastrophe models that recognize the benefits of wildfire safety and mitigation actions at the state, local, and parcel levels.

4. Directing the FAIR Plan to further expand commercial coverage to $20 million per building to close insurance gaps for homeowner’s associations and condo developments to help meet the State’s housing goals and to provide required coverage to other large businesses in the state.

5. Holding public meetings to explore incorporating California-only reinsurance costs into rate filings.

6. Improving rate filing procedures and timelines by enforcing the requirement for insurance companies to submit a complete rate filing, hiring additional Department staff to review rate applications and inform regulatory changes, and enacting intervener reform to increase transparency and public participation in the process.

7. Increasing data reporting by the FAIR Plan to the Department, Legislature, and Governor to monitor progress toward reducing its policyholders.

8. Ordering changes to the FAIR Plan to prevent it from going bankrupt in the case of an extraordinary catastrophic event, including building its reserves and financial safeguards.

Lara’s plan is hopefully going to deter more insurance companies from leaving California by loosening certain elements of insurance regulations. Under the existing system, insurers need to apply with the Department of Insurance to raise their rates and provide supporting documentation to justify the rate hike. The process would allow consumer advocates to intervene along the way, acting as watchdogs in the process.

With property owners desperately searching for affordable comprehensive coverage, Lara’s plan cannot come sooner. While this will take time to implement, it is an important step in restoring the property marketplace in California. If you have any questions relating to this article please feel free to reach out to me at jhoolihan@ranchomesa.com or 619-937-0174.

SafetyOne™ Mobile App Streamlines Safety Within the Janitorial Industry

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

Earlier this year, Rancho Mesa launched its proprietary SafetyOne™ mobile app. Feedback so far has been extremely positive, with many clients taking full advantage of the extensive resources the app provides.

As a specialist in the janitorial industry, I have already witnessed how much SafetyOne has improved our clients’ risk management programs. When asked how the app can improve a risk management program, we focus on efficiency and how the app will streamline all of a business’ processes.

For example, the app will help improve the lines of communication between management and crews by sending push notifications to mobile app users, such as crew leaders, with important information and reminders. The app will document incidents at your clients’ location and automatically notify the appropriate administrators in real-time.

The app also ensures that safety trainings are a priority. A company’s administrative staff will be able to determine what safety training topics will be available to each crew. Then, crews will be able to document regular safety meetings easily through their mobile device. The safety meeting documentation will be available in real-time, which helps management address who might have missed the meeting.

In addition, the app is helpful in addressing and minimizing safety issues in the field. The app allows a user to perform and document risk observations at each jobsite to find and address safety concerns before there is an incident.

And finally, one of the most talked about advantages the app provides Rancho Mesa clients is the ability to go paperless. The SafetyOne app eliminates paperwork through electronic documentation of safety meetings, risk observations and other forms.  This allows the information to be accessed at any time.

If you are a Rancho Mesa client and have not yet explored the capabilities of SafetyOne, we strongly recommend you explore this new technology. With the assistance of training videos and our client services team, the implementation should be straightforward and easy. 

If you have any questions relating to SafetyOne, please feel free to reach out to me at (619)937-0174 or jhoolihan@ranchomesa.com.

Should Union Janitorial Employers have a lower Workers’ Compensation rate than Non-Union Employers?

Author Jeremy Hoolihan, CRIS, Janitorial Group Leader Rancho Mesa Insurance Services, Inc.

A recent study by the Commission on Health, Safety and Workers’ Compensation made an argument that the janitorial industry should be split into two workers’ compensation class codes.  This change would be similar to how many construction operations field class codes are separated between an over and under dollar amount per hourly wage.   As an example, an electrical contractor’s field wages are split at over and under $30/hour.  Why does this matter? It matters, because the workers’ compensation marketplace perceives the higher-wage-earner to be a safer risk (the thinking being - a higher-wage-earner is more experienced and less likely to sustain injury), thus, the workers' compensation premium rates are less for those in the “above” threshold category.  However, the BIG difference between this rationale and the study is that rather than basing the split rates on pay scale, the study proposes the split be between Union and Non-Union companies.

The study’s line of reasoning is that Union firms have fewer injuries and as a whole have a much lower loss ratio than Non-Union firms.  However, many industry experts disagree and believe that the figures are skewed and not representative of the true industry experience.  Clearly with the varying opinions and so much at stake, much more research and discussion needs to take place before anything is implemented.  

With that said, in order to remain relevant and competitive, all janitorial companies need to stay well informed and be prepared for any changes should they occur.  Rancho Mesa’s janitorial department will keep a close eye on any new developments and continue to help improve your company's risk profile, so you will be well informed and prepared for any changes.  If you have any questions please feel free to contact us