Author: Kimberlee | February 14, 2025
Edited by: Kimberlee and Reviewed: Kimberlee
Workers’ compensation insurance is a necessary insurance policy for businesses that have employees. Without it, you can be subject to lawsuits for injuries that happen while employees are working. In most states, employers are required by state law to get a policy. The only exceptions are Texas and South Dakota.
Let’s take a closer look at what workers’ compensation insurance does.
Workers’ compensation insurance pays the costs associated with employees who get hurt on the job. It pays for medical care, rehabilitation, vocational training if necessary, and lost wages while the employee is off of work injured. Employers are required to get a policy based on state laws.
Employers who have a workers’ compensation policy gain financial security. If an employee gets hurt on the job, they are not left holding the bill for expenses. Without it, employees could sue for damages, which may be more than the actual costs, because they might get pain and suffering damages paid.
While workers’ compensation law requirements exist in 49 out of the 50 states, it is important to note that this is not mandated by federal law. There is a federal law, the Federal Employees’ Compensation Act (FECA), that provides benefits for federal employees who get hurt at work.
State laws require minimum coverage and will provide for certain exemptions of coverage in the law.
We examine each state’s workers’ compensation laws.
Alabama employers are required to have workers’ compensation insurance for work-related claims. The law says that any employer with at least five employees who are not contractors must have a policy in place. The state exempts businesses with fewer than five employees, domestic workers, farm laborers, and casual employees. The state also includes corporate officers and LLC members as those required to get workers’ compensation.
In Alaska, any business with at least one employee must have a workers’ compensation policy available to cover claims. Employers may qualify for self-insurance if the Alaska Workers’ Compensation Board approves them.
There is a healthy list of exceptions to coverage in Alaska:
Arizona requires any business or employer with at least one employee to maintain a workers’ compensation policy. It doesn’t matter if the employee is full or part-time. Workers’ compensation is overseen by the Industrial Commission of Arizona (ICA). It does allow for certain employees to be exempt from the rule. These exemptions include independent contractors, casual workers, and domestic employees.
Employers in Arkansas are mandated to get workers’ compensation insurance if they have three or more employees. Some high-risk industries, such as construction, may require a policy if you have any number of employees. Exempt groups include farm laborers, domestic workers, and employees of religious or charitable organizations.
California employers with both full and part-time employees are required by law to have workers’ compensation insurance. The threshold is just one employee. There are exemptions that include:
If a business has one or more employees in Colorado, they are required to get a workers’ compensation insurance policy. This state even mandates that employees who are family members have coverage. The exemptions are casual maintenance workers earning less than $2,000 per year, private domestic workers not working full-time, and real estate agents paid by commission.
In Connecticut, if you have at least one part-time, full-time, or seasonal employee, you are required to get workers’ compensation insurance. Sole proprietors are included in the requirements in some cases. Exceptions to the rule are LLC members, corporate officers, and partners who can choose to opt out.
Delaware is another state that requires a workers’ compensation policy if you have at least one employee. There are exemptions for farm workers and corporate officers, though employers can opt to carry coverage for them, too.
Florida is a little more liberal on the requirement of workers’ compensation policies. Its law says that you need to have a policy if you have four or more employees. However, this is also mandated based on industry. Construction employers with at least one employee, including the business owner, require a policy. Agriculture employers with at least six regular employees or 12 seasonal employees who work more than 30 days in a season are required to get a policy. Corporate officers and LLC members count as employees.
In Georgia, a business with at least three employees is required to get workers’ compensation insurance. LLC members and corporate officers are included as employees for this requirement. Exemptions include sole proprietors, partners, independent contractors, U.S. government agencies, railroad carriers, farm laborers, and domestic servants.
The state of Hawaii requires employers with at least one employee to get a policy. This includes both full-time and part-time workers. Even temporary employees must be covered by workers’ compensation insurance. Exceptions to the rule include;
Idaho law requires a business with at least one employee to obtain workers’ compensation insurance. It doesn’t matter if the employee is full-time, part-time, seasonal, or occasional. Sole proprietors are exempt from the requirement.
When business owners hire their first employee in Illinois, they must obtain a workers’ compensation policy. It doesn’t matter whether that employee is full or part-time. There are some exceptions to the requirement:
In Indiana, having just one employee triggers the requirement to obtain workers’ compensation insurance. It doesn’t matter if the employee is full-time, part-time, seasonal, or temporary. Sole proprietors may be exempt from the requirement.
Iowa law states that employers with at least one employee must obtain workers’ compensation. There are exemptions to the rule:
In Kansas, an employer with at least one employee who is making at least $20,000 in payroll must have workers’ compensation insurance. Some exceptions include agricultural workers, realtors acting as independent contractors, and firefighters with specific relief associations.
There is no minimum employee count in Kentucky that requires workers’ compensation. If an employer has at least one employee, he must get a policy. Failure to get a policy comes with stiff fines of up to $1,000 per day per employee. The exemptions include:
Any business with at least one full-time, part-time, temporary, or seasonal employee must get a workers’ compensation policy in Louisiana. There is no minimum payroll component to the requirement. Some exceptions apply, such as sole proprietors, some independent contractors, and certain entertainers.
Maine is like many other states, requiring a workers’ compensation policy if you have at least one employee. This is true for employers in both the public and private sectors. Exceptions include:
For Maryland, the rules are simple. You must get a workers’ compensation insurance policy if you have at least one employee. There are a couple of exceptions that include sole proprietors, partners, and companies with three or fewer agricultural employees with a payroll below $15,000 annually.
The minimum number of employees required for a workers’ compensation policy in Massachusetts is one employee. Certain exceptions do apply, including:
Michigan’s workers’ compensation laws are a little complex. The law states that you are required to have a policy if you have three or more employees. However, if you have one employee who works at least 35 hours per week for at least 13 weeks, you must get a policy. This rule applies to both public and private sector companies. Sole proprietors, agricultural employees, and domestic workers are exempt.
If you have even one employee, you are required to get workers’ compensation insurance in Minnesota. This is true whether the employee is full-time or part-time. Some household employees and certain farm workers are exempt from coverage.
Mississippi law says that you must get a workers’ compensation policy if you have five or more employees. Those with fewer employees can opt to get the coverage but are not required to. Domestic workers, farm workers, non-profit employees, and religious organization employees are exempt.
Missouri is another state that mandates workers’ compensation insurance for employers with at least five employees. However, construction companies with just one employee are also required to get a policy. Sole proprietors and partners can elect to have coverage but are not required to have it.
Montana law says that if a small business has at least one employee, it must get a policy. There is no minimum employee count. There are exemptions that include:
In Nebraska, the rule is that if you have at least one employee, you must get a workers’ compensation policy. This is true for private businesses, government entities, and even employers with part-time workers or minors. Those with agricultural workers have a different guideline. They must have at least 10 unrelated employees who work at least 13 weeks in a year.
Nevada requires employers with at least one employee to obtain workers’ compensation or face legal penalties. The exemptions to the rule include:
In New Hampshire, if you have at least one employee, you must get workers’ compensation insurance. It doesn’t matter if the employee is full or part-time or if they are a family member of the employer. Even non-profits are required to get a policy. The exemptions include:
If you have one employee in New Jersey, you must get workers’ compensation insurance. The requirement includes full and part-time employees, as well as seasonal and occasional employees. The exemptions include:
New Mexico’s law requires businesses to get workers’ compensation if they have three or more employees. It is irrelevant if the position is permanent, temporary, or transitory. The notable exceptions are domestic servants, real estate agents, and federal workers covered under the Federal Employees’ Compensation Act.
A business with at least one employee must obtain workers’ compensation insurance in New York. It doesn’t matter if the employee is full or part-time. The exceptions to the rule are:
Any business with three or more employees in North Carolina must get workers’ compensation insurance. This includes businesses operating as corporations, sole proprietorships, limited liability companies, and partnerships. There are exceptions to the rule, which include agricultural employers with fewer than 10 employees, domestic workers, and specific sawmill and logging operations.
In North Dakota, any business with at least one employee must carry workers’ compensation insurance. It must be purchased prior to hiring that employee and be in place on their first day of employment. The exceptions include:
Any Ohio business with at least one employee must get a policy. Sole proprietors with no employees are exempt. Workers’ compensation insurance is managed by the Bureau of Workers’ Compensation (BWC).
Oklahoma law says that if you have at least one employee, you must get workers’ compensation insurance. A notable exception is a family business that has five or fewer employees, all related by blood or marriage.
If you have one or more employees in Oregon, you must obtain workers’ compensation insurance. This is true for full- and part-time employees. There are some exceptions, such as employers with casual laborers with low payroll in a 30-day period, certain corporate officers, and sole proprietors.
Based on Pennsylvania law, any business with at least one employee is required to get workers’ compensation insurance. The rule includes seasonal and part-time employees as well as family members. Nonprofits are also required to carry workers’ compensation. Exceptions to this requirement are:
The minimum requirement for workers’ compensation insurance in Rhode Island is one. Exceptions to this rule are sole proprietors, partners, certain real estate professionals, agricultural workers, and domestic service employees.
The law in South Carolina says that if you have four or more employees, you must get workers’ compensation. Both part-time workers and family members count as employees. Some exceptions to the rule include agricultural workers, real estate agents, and casual workers. The law is overseen by the South Carolina Workers’ Compensation Commission.
South Dakota is one of two states that does not require business owners to carry workers’ compensation insurance. The state recommends that businesses get a policy to prevent lawsuits in the event that an employee gets injured and decides to sue the employer.
If you are an employer with five or more employees in Tennessee, you are required to get a workers’ compensation policy. It doesn’t matter if the employees are full or part-time. Those in construction or coal mining must carry a policy for all employees, including subcontractors. Exceptions include:
Texas does not require a business owner to obtain workers’ compensation insurance. Like South Dakota, Texas recommends business owners get a policy to prevent lawsuits from happening when employees get hurt at work.
If you have at least one employee in Utah, you must get a policy. Sole proprietors and LLC members can waive coverage if they choose.
In Vermont, if you have at least one employee, you are required to obtain workers’ compensation insurance. This includes part-time workers. One major exception is a business that is approved to be self-insured by the Vermont Department of Labor.
Virginia law states that any employer with two or more employees must have a policy. This rule includes subcontractors. Sole proprietors with no employees or subcontractors are exempt from carrying workers’ compensation.
In Washington, any business with at least one employee must get workers’ compensation. There is no minimum employee count. Some exceptions exist that include sole proprietors and domestic workers employed less than 40 hours per week.
West Virginia requires you to obtain workers’ compensation when you hire your first employee. There are some exceptions. Casual employers who hire people for a temporary period are exempt. You don’t need a policy if you have fewer than three employees who work no more than 10 days per quarter. Also, five or fewer agricultural employees are exempt.
When a business has three or more employees, it must obtain workers’ compensation insurance. However, those with less than three employees may still need to obtain a policy if they pay more than $500 in combined gross wages in a quarter. Farmers need a policy if they have six or more workers for at least 20 days during a calendar year. The exceptions to the rules are:
Any Wyoming business with at least one employee must obtain workers’ compensation. The law includes both full and part-time employees. The exceptions include:
There are legal ramifications to not having a required workers’ compensation policy. Penalties include fines that are often a per day per employee fine imposed by regulatory agencies.
A good agent can help you assess your need for workers’ compensation based on state laws. Not only will they help with the legal requirements, but they will also help you determine the amount of coverage you need for your company. Get a quote today.
About the author
Insurance
April 3, 2025
Insurance
March 19, 2025
Insurance
March 16, 2025