California's dual wage thresholds rose by $2 to $5 an hour for policies with effective dates on or after September 1, 2026, and every one of them is decided at final audit rather than at quote. If an employee's regular hourly wage is not shown to equal or exceed the threshold, that employee's payroll is classified in the low-wage code, which carries the higher rate.
That is the whole mechanism. A contractor can be quoted on the high-wage code all year and audited into the low-wage one, and nothing about the policy has to change for it to happen.
What are California's new dual wage thresholds?
The Workers' Compensation Insurance Rating Bureau of California submitted the changes to the Insurance Commissioner on February 26, 2026 as part of its September 1, 2026 regulatory filing. The thresholds had last been amended in 2024, and the stated reason for moving them is wage inflation since then.
| Classifications | Trade | Old threshold | New threshold |
|---|---|---|---|
| 5403 / 5432 | Carpentry | $41.00 | $46.00 |
| 5632 / 5633 | Steel framing | $41.00 | $46.00 |
| 5446 / 5447 | Wallboard installation | $41.00 | $45.00 |
| 6218 / 6220 | Excavation, grading, land leveling | $40.00 | $45.00 |
| 6307 / 6308 | Sewer construction | $40.00 | $45.00 |
| 6315 / 6316 | Water and gas mains | $40.00 | $45.00 |
| 5467 / 5470 | Glaziers | $39.00 | $43.00 |
| 5484 / 5485 | Plastering or stucco | $38.00 | $42.00 |
| 5190 / 5140 | Electrical wiring | $36.00 | $40.00 |
| 5027 / 5028 | Masonry | $35.00 | $37.00 |
| 5538 / 5542 | Sheet metal, HVAC ductwork | $33.00 | $37.00 |
| 5185 / 5186 | Automatic sprinkler installation | $33.00 | $36.00 |
These are California's own classifications. Some share numbers with the NCCI system most states use, but California sets its own definitions and rules — how class codes differ by state has examples. | 5201 / 5205 | Concrete or cement work | $33.00 | $36.00 | | 5474 / 5482 | Painting, waterproofing | $32.00 | $36.00 | | 5183 / 5187 | Plumbing, refrigeration, HVAC equipment | $32.00 | $35.00 | | 5552 / 5553 | Roofing | $31.00 | $33.00 |
The largest moves are carpentry and steel framing at five dollars an hour. Roofing moved two.
How does a dual wage classification get verified at audit?
The rule text is the part worth reading, because it says where the decision happens. For each high-wage code, the manual states that assignment of the classification is subject to verification at the time of final audit that the employee's regular hourly wage equals or exceeds the threshold, and that the payroll of an employee whose regular hourly wage is not shown to meet it is classified in the paired low-wage code.
Two words in that sentence do most of the work.
"Regular" excludes the things that inflate an average. A figure computed by dividing total compensation by hours worked sweeps in overtime premium and bonus dollars, and it answers a different question than the rule asks. The overtime premium portion is already treated separately in the premium base, and it does not lift a $44 carpenter over a $46 threshold.
"Shown" puts the burden on the records. The default is the low-wage code. An employee whose wage genuinely clears the threshold but whose payroll records do not demonstrate it is treated the same as one who does not clear it.
What records demonstrate the regular hourly wage
The employees who need attention are the ones near the line, and after September 1 there are more of them than there were in August. A $42 carpenter cleared the old $41 threshold and misses the new $46 one by four dollars.
What holds up at audit is payroll data kept at the time, reporting the regular hourly rate by employee and by pay period, with overtime and bonuses identifiable as separate items rather than folded into a blended figure. What does not hold up is a summary produced after the audit letter arrives that asserts an average.
Where a single employee works across trades, the division of payroll question and the wage question stack. Both are answered from the same records, and a contractor who cannot support one usually cannot support the other. The same rules that govern what payroll counts in a workers' comp audit decide what enters the calculation before any threshold is applied.
The rest of the September 1 filing
Three other changes landed in the same package.
The minimum and maximum payroll limitations for executive officers, partners, individual employers and members of a limited liability company were adjusted for wage inflation since they were last amended in 2025. The minimum went from $63,700 to $66,300 per year, the maximum from $165,100 to $171,600.
The experience rating eligibility threshold rose from $10,800 to $11,700, reflecting wage inflation and the new expected loss rates. Small risks sitting just above the old line may drop out of experience rating at their next rating date.
And beginning with this filing, expected loss rates are published at three decimal places instead of two.
For carriers writing California construction
The dual wage codes are the part of a California construction book where quoted exposure and audited exposure most reliably separate, and the gap widened on September 1 without anyone doing anything wrong.
Three things make that visible earlier. Flag renewals in the affected class codes where the reported average wage sits within a few dollars of the new threshold, because those are the accounts whose audits will move. Ask for wage detail at the point the classification is assigned rather than at audit, since a policy quoted on a code the records will not support is a dispute with a twelve-month fuse. And treat the September 1 boundary as a real line in the audit queue, because policies incepting in August and in September are audited against different thresholds.
For the contractor, the arithmetic is worth running before the audit rather than after. An employee a dollar under the threshold costs the difference between two rates on that employee's entire annual payroll, and a raise that closes the gap is sometimes cheaper than the reclassification. That comparison only exists while the year is still ahead of you.
Frequently asked questions
What are California's dual wage thresholds for 2026?
They rose by $2 to $5 an hour for policies with effective dates on or after September 1, 2026. Carpentry and steel framing moved from $41 to $46, electrical wiring from $36 to $40, plumbing from $32 to $35, masonry from $35 to $37, and roofing from $31 to $33.
How is a dual wage classification verified?
At final audit. The classification rule states that assignment of the high-wage code is subject to verification at the time of final audit that the employee's regular hourly wage equals or exceeds the threshold, and payroll that is not shown to meet it is classified in the low-wage code.
What happens if an employee's wage falls below the dual wage threshold?
That employee's payroll is moved to the low-wage classification, which carries the higher rate. The move is made employee by employee on audited payroll, not across the whole policy, so a crew can end up split across both codes.
Do the new thresholds apply to a policy that started before September 1, 2026?
No. The amendments apply to policies with effective dates on or after September 1, 2026. A policy that incepted in August 2026 is audited against the thresholds in effect when it incepted.
What else changed in the September 1, 2026 WCIRB filing?
The minimum and maximum payroll limitations for executive officers, partners, individual employers and LLC members rose to $66,300 and $171,600 per year, and the experience rating eligibility threshold rose from $10,800 to $11,700.
