Workers Compensation Insurance
Requirements By State
Understanding workers compensation state requirements helps you protect your business, take care of employees, and stay compliant with local laws. Whether you’re hiring your first team member or expanding into a new state, ensure you meet employer obligations, so one work-related injury doesn’t set your growing business back.
Coverage 101
Workers compensation insurance provides medical benefits to employees who are injured or become ill while working for your business. It is often state-mandated.
Quick Overview: When Workers Comp Is Typically Required
State requirements vary, but workers compensation is generally required when you hire your first employee. Some states have specific rules for:
- The number of employees you hire
- Operating in a high-risk industry
- Whether part-time or contract employees are included
- Whether you can purchase coverage from private insurers
- Exempting sole proprietors (unless they opt in)
Workers compensation is an essential component of a comprehensive small business insurance plan. Reaching the point where workers comp is required means your business is hitting new milestones with new responsibilities. The right coverage helps you move forward with confidence.
Workers Compensation Insurance Requirements by State
Your specific workers compensation laws depend on where your employees work. Click your state below for more information.
Laws change frequently, so always confirm your state’s official agency rules before making decisions.
Your specific workers compensation laws depend on where your employees work. Click your state below for more information.
Laws change frequently, so always confirm your state’s official agency rules before making decisions.
Notable Differences in Workers Comp State Laws by State
How to Get Workers Compensation Insurance
Once you confirm your state requires coverage, the next step is securing a policy. Insurance Canopy makes it easy to get workers compensation insurance for your small business. Simply fill out our online application and receive a free quote in your email inbox.
Have the following information ready:
- Your business’ legal status
- Your federal employer ID number
- Your annual payroll amounts
- The number of employees you have on payroll
- Information about owners, partners, or others to include or exclude from coverage
If you have questions, our U.S.-based, licensed support agents are happy to help you navigate your state’s requirements! Contact us.
FAQs About Workers Compensation State Laws
How Many Employees Before Workers Comp Is Required?
In most states, workers compensation is required once you hire one or more employees. Some states set higher thresholds, and certain industries may have stricter rules. Always verify your state’s specific employee-count requirements for workers comp.
Do Sole Proprietors Need Workers Compensation Insurance?
In many states, sole proprietors are not required to carry workers compensation insurance for themselves. Workers comp is generally intended for businesses with W-2 employees; however, specific circumstances may call for it. Learn more about workers comp for sole proprietors.
What Happens if You Don’t Carry Workers Compensation?
Failing to carry required workers compensation can result in:
- Fines or penalties
- Stop-work orders
- Personal liability for medical costs and lost wages
Beyond penalties, running your business without workers comp coverage exposes you to financial risk if an employee is injured.
Does an LLC Need Workers Compensation Insurance?
Forming an LLC does not eliminate the requirement to carry workers compensation insurance; it’s merely a business structure that helps separate your personal and business assets. If your LLC has employees and state law requires coverage, you need active workers comp insurance to stay compliant.
Are Part-Time Employees or 1099 Contractors Covered?
In many states, part-time employees count toward workers compensation requirements and must be covered.
Independent contractors (1099 workers), however, are generally not covered, but misclassification can result in penalties. Always confirm classification requirements with your state’s official labor board.
What Are Monopolistic State Funds for Workers Compensation?
Some states require employers to purchase workers compensation coverage through a state fund rather than a private insurer. These are often called “monopolistic states” and include:
- Ohio
- North Dakota
- Washington
- Wyoming
