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Workers’ Compensation Requirements
Every state has its own workers’ compensation requirements. In most states, workers’ compensation insurance laws are based on your:
- Number of employees: The more employees your business has, the more workers’ comp coverage you need.
- Type of business: Some states have coverage requirements for certain businesses with employees.
Each state’s requirement for the number of employees varies. For example, Alabama requires businesses with five or more employees to carry coverage. However, in Arkansas, employers with at least three employees need coverage.
Some states may also have workers’ comp exemptions for certain types of businesses and employees. For example, railroad employees and farm workers are exempt in North Carolina. In Wisconsin, workers at Native American businesses, such as casinos, are exempt.
Every state has its own division of workers' compensation to oversee workers’ compensation requirements and laws. It’s important to know what your state requires because failing to follow the laws where you live can result in penalties, fines or even jail time.
You can purchase workers’ compensation insurance from state-funded programs or a private insurance company, like The Hartford. We’re here to answer any questions you have and help guide you each step of the way. Call our specialists at 855-829-1683 to get started.
Is Workers’ Comp Required for My Business?
Although most businesses are required to carry workers’ compensation insurance, there are a few exemptions, including:
- Farmers: If you own a farm and have a seasonal employee working, many states don’t require you to carry workers’ comp coverage for them.
- Sole proprietors: If you own and operate your own business, you may be exempt from workers’ compensation insurance.
- Independent contractors: In some states, contractors aren’t considered employees, because they operate independently from your business.
- Domestic workers: If you employ workers in your private home, many states don’t consider them employees.
It’s a good idea to check your state’s specific exemptions and review the guide to workman’s compensation to make sure you have the right amount of coverage.
When Is Workers’ Compensation Required?
Most states require workers’ compensation coverage if you have employees. Even if workers’ compensation is optional in your state, it can still be a good idea to have it so you’ll be prepared for the unexpected. If an employee gets injured or ill because of their work, workers’ comp will help. Otherwise, you’ll have to pay out of pocket for your employee’s medical care and recovery.
If your business is in a state with a state-funded insurance program, your state handles the payment. In other states, the insurance carrier pays the benefits. You can review your state requirements to see how workers’ comp payments are handled for your employees.
How Much Can It Cost Me Without Workers’ Compensation?
If you don’t carry workers’ compensation and your state requires it, you can face severe penalties and your business can really suffer. Let’s look at a couple common situations:
- An employee trips, falls and breaks their leg in your store: If they sue you and you don’t have workers’ compensation insurance coverage, you’re responsible for paying all your legal expenses, which can cost thousands of dollars.
- Your construction worker gets injured on the job and has a permanent disability: Without workers’ comp, you’re responsible for paying your injured employee’s disability benefits. This can add up over time and really impact your small business.
Lawsuits, disability payments and other medical costs can be devastating to your small business’ finances. Workers’ comp insurance can help your employees recover from a work-related injury or illness and assist them in their transition to returning to work, while also helping protect your business.
How Much Is a Workers’ Compensation Policy?
Different factors can affect your workers’ compensation costs, such as your business’:
- Size, because the more employees you have, the more it can cost to provide coverage.
- Type, since higher risk businesses may have an increased insurance rate.
- Location, because state regulations and coverage requirements vary.
Although there’s a lot to think about, getting workers’ comp insurance doesn’t have to be hard. Our specialists are here to help. Speak with them at 855-829-1683 to get answers to your questions.
Workers Compensation Requirements by State
Workers’ compensation requirements vary by state. Business owners should make sure they follow their state’s specific laws. Browse all states workers’ comp insurance coverages to find out the requirements where you live.
Ready To Offer Workers’ Compensation Benefits?
Workers’ comp benefits are important to small business owners, employees and family members. That’s why we work hard to offer comprehensive workers’ comp insurance coverage with added benefits, such as:
- A network of preferred medical providers, giving your employees access to more than 1 million physicians.
- Access to more than 65,000 pharmacies with no out-of-pocket expenses.
- Experienced nursing care to help your employees get the treatment they need.
- Pay-as-you-go billing, which allows you to make smaller premium payments throughout the year.
Get a quote today or call our specialists at 855-829-1683 to learn more about workers’ comp coverage.
This article provides general information, and should not be construed as specific legal, HR, financial, insurance, tax or accounting advice. As with all matters of a legal or human resources nature, you should consult with your own legal counsel and human resources professionals. The Hartford shall not be liable for any direct, indirect, special, consequential, incidental, punitive or exemplary damages in connection with the use by you or anyone of the information provided herein.
Last Updated: March 15, 2023
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