Workers’ compensation laws are there to protect both businesses and their employees. Knowing the laws is essential, whether you’re an employer ensuring coverage for your team or an employee who wants to know your rights in case of a workplace injury or illness.
It’s important to note that these laws differ significantly from state to state and can change over time. Failing to stay compliant could bring severe financial and legal consequences for your business.
So, what is workers compensation? In short, it’s a type of insurance that provides benefits to employees who suffer work-related injuries or illnesses. These benefits can include coverage for medical expenses, lost wages, and rehabilitation costs. In exchange, employees generally relinquish the right to sue their employer directly for negligence.
State-by-State Workers Compensation Laws
Now that you know exactly what workers’ compensation is, let’s break down the laws state by state:
Alabama
If your business has five or more employees (including officers/members of LLCs and corporations), you’re required to have workers’ compensation insurance. Some businesses, like those solely owned and operated without any additional employees, may be exempt.
You can purchase coverage from a commercial insurance provider. Larger businesses may qualify to self-insure with approval. Alabama doesn’t have a state-run insurance fund.
Source: Alabama Department of Labor
Alaska
Any business with even one employee must have workers’ compensation insurance. There are limited exceptions, such as for some part-time employees and sole proprietors.
You can get coverage from a commercial insurer, Alaska’s state-administered fund, or, if your business qualifies, through self-insurance.
Source: Alaska Department of Labor and Workforce Development
Arizona
Workers’ compensation insurance is mandatory for any business with regular employees, including sole proprietors who have employees. Exemptions are very limited.
Coverage must be obtained from a commercial provider. Larger businesses may be approved to self-insure.
Source: Industrial Commission of Arizona
Arkansas
Most businesses with three or more employees must carry workers’ compensation insurance. Farm laborers are exempt, and there are additional exceptions for businesses with very few employees.
Purchase insurance coverage from a commercial carrier or, if qualified, self-insure.
Source: Arkansas Workers’ Compensation Commission
California
All businesses, regardless of size or employee status, must carry workers’ compensation insurance — this includes corporate officers. Sole proprietors without employees have the option to obtain coverage for themselves.
You can get coverage from a commercial provider, California’s state fund, or self-insure with approval.
Source: California Department of Industrial Relations
Colorado
Employers with one or more employees, regardless of the number of hours worked, must have workers’ compensation insurance. Businesses need to be especially mindful of correctly classifying independent contractors, as they are usually not covered.
Obtain coverage from a commercial insurer or, if approved, self-insure.
Source: Colorado Department of Labor and Employment
Connecticut
Businesses with one or more employees must have workers’ compensation insurance. Corporate officers are automatically covered but can choose to opt out. Sole proprietors are not required to carry coverage but can purchase it if desired.
Coverage can be purchased from a commercial provider or, with approval, your business can self-insure.
Source: Connecticut Workers’ Compensation Commission
Delaware
Businesses with one or more employees must carry workers’ compensation insurance. An exemption exists for farm workers, but employers can still choose to cover them.
You can purchase coverage from a commercial insurance company or self-insure if your business is approved.
Source: Delaware Department of Labor
District of Columbia
Employers with one or more employees must have workers’ compensation insurance. Sole proprietors without employees can choose to get coverage for themselves. Homeowners employing domestic workers must follow specific rules.
You may purchase coverage from a commercial insurer or self-insure if you qualify.
Source: DC Department of Employment Services
Florida
Construction businesses with one or more employees must carry workers’ compensation insurance. In other industries, businesses with four or more employees are required to have coverage. Corporate officers and LLC members are included in the employee count.
You can purchase coverage through a commercial provider or, if your business qualifies, self-insure.
Source: Florida Division of Workers’ Compensation
Georgia
If your business has three or more employees, you must carry workers’ compensation insurance. Company officers and LLC members are counted as employees. Sole proprietors and partners are not considered employees under this law.
Purchase coverage commercially or self-insure if you meet the requirements.
Source: State Board of Workers’ Compensation
Hawaii
Any business with one or more employees must have workers’ compensation insurance. This includes LLC members. There are limited exemptions for specific situations, such as certain domestic workers or shareholders.
Coverage can be purchased from a commercial carrier or, with approval, you can self-insure. You can also purchase through Hawaii’s state-administered fund.
Source: Hawaii Department of Labor and Industrial Relations
Idaho
Employers with one or more employees must have workers’ compensation insurance. Sole proprietors, some domestic workers, and certain agricultural employees may be exempt.
You can purchase coverage commercially, from Idaho’s state fund, or self-insure if your business is approved.
Source: Idaho Industrial Commission
Illinois
Nearly all employers, even those with only one part-time employee, must carry workers’ compensation insurance. Construction businesses and those operating in hazardous fields have even stricter requirements.
You must purchase coverage from a commercial provider or, if approved, self-insure.
Source: Illinois Workers’ Compensation Commission
Indiana
All employers must have workers’ compensation coverage, regardless of the number of employees. Sole proprietors, partners, and LLC members can choose to include themselves in their coverage, while corporate officers have the option to opt-out.
You can choose to purchase coverage through a commercial insurer or self-insure with approval.
Source: Workers’ Compensation Board of Indiana
Iowa
Most businesses must carry workers’ compensation insurance. Sole proprietors and LLC members can choose to be covered. Specific exemptions exist for some domestic and agricultural workers.
You can purchase coverage commercially or, if qualified, self-insure.
Source: Iowa Division of Workers’ Compensation
Kansas
If your business (sole proprietorships excluded) has a gross annual payroll over $20,000, you must carry workers’ compensation insurance. Some additional exemptions may apply.
Purchase coverage from a commercial insurer or self-insure if your business is approved.
Source: Kansas Department of Labor
Kentucky
All employers with one or more employees must have workers’ compensation insurance. Sole proprietors, partners, and LLC members have the option to include themselves in the coverage.
Purchase coverage commercially, through Kentucky’s state-administered fund, or self-insure if your business qualifies.
Source: Kentucky Department of Insurance
Louisiana
All employers, regardless of the number of employees, must provide workers’ compensation coverage. There are limited exemptions, such as some roles within mineral exploration.
You can purchase coverage through a commercial provider, Louisiana’s state fund, or self-insure if approved.
Source: Louisiana Workforce Commission
Maine
Businesses with one or more employees must carry workers’ compensation insurance. Independent contractors don’t count toward the employee total, but if those contractors have employees, they need to be covered.
You can purchase coverage from a commercial insurer, through Maine’s state fund, or self-insure if approved.
Source: Maine Workers’ Compensation Board
Maryland
If your business has one or more employees, you’re required to carry workers’ compensation insurance. Very limited exemptions exist, such as for some agricultural roles. Sole proprietors can choose to get coverage for themselves.
You can purchase coverage from a commercial provider, Maryland’s state fund, or self-insure if your business is approved.
Source: Maryland Workers’ Compensation Commission
Massachusetts
All businesses, regardless of size or employee status, must have workers’ compensation coverage. Sole proprietors, partners, and LLC members have the option to include themselves in the coverage. If you employ domestic workers, specific rules apply.
Purchase coverage commercially or, with approval, self-insure.
Source: Massachusetts Office of Labor and Workforce Development
Michigan
If you have one or more employees, you must have workers’ compensation insurance. Some specific exemptions exist, including those for certain family members working in the business and corporate officers under specific conditions.
You can purchase coverage commercially, through Michigan’s state-administered fund, or self-insure with approval.
Source: Michigan Workers’ Compensation Agency
Minnesota
All employers must carry workers’ compensation insurance to cover their employees, including minors and non-US citizens. Limited exemptions exist, such as for some family farms and certain corporate officers.
Purchase coverage through a commercial carrier or self-insure if your business is approved.
Source: Minnesota Department of Labor and Industry
Mississippi
Businesses with five or more regular employees must carry workers’ compensation insurance. Sole proprietors and corporate officers aren’t included in the employee count if they choose to opt out of coverage.
Purchase coverage commercially or self-insure if you qualify.
Source: Mississippi Workers Compensation Commission
Missouri
Employers with five or more employees must have workers’ compensation insurance. Construction businesses of any size must carry coverage for all employees. Some exemptions exist, such as for certain farm workers.
Purchase insurance from a commercial provider or, if approved, self-insure.
Source: Missouri Department of Labor
Montana
All employers must carry workers’ compensation coverage. Construction businesses must cover all employees, whether they reside in Montana or not. Sole proprietors can choose to opt out of coverage. Independent contractors must show proof they have their own coverage.
You can purchase coverage commercially, through Montana’s state-administered fund, or self-insure if approved.
Source: Montana Department of Labor and Industry
Nebraska
Employers with one or more employees must carry workers’ compensation insurance. Sole proprietors without employees can choose to get coverage for themselves. Specific exemptions exist for certain agricultural work.
Purchase insurance from a commercial provider or self-insure if you meet the qualifications.
Source: Nebraska Workers’ Compensation Court
Nevada
Any business with one or more employees must have workers’ compensation coverage. This also includes any subcontractors and their employees. Sole proprietors without employees can opt-in if they wish.
You must purchase coverage from a commercial provider. Larger approved businesses have the option to self-insure.
Source: Nevada Department of Business & Industry – Industrial Relations
New Hampshire
All employers, regardless of size, must carry workers’ compensation insurance. Sole proprietors and partners can choose to cover themselves. If you use subcontractors, make sure they carry their own coverage.
You can purchase coverage commercially or self-insure with approval.
Source: New Hampshire Department of Labor
New Jersey
If you have one or more employees, you must carry workers’ compensation insurance. Sole proprietors without employees can choose to get coverage. There are specific rules if you employ workers from out of state.
Purchase coverage from a commercial provider or self-insure if your business is approved.
Source: New Jersey Department of Labor and Workforce Development
New Mexico
Employers with three or more employees must have workers’ compensation insurance. Construction businesses must always carry coverage, regardless of the number of employees.
You can purchase coverage commercially, through New Mexico’s state fund, or self-insure if approved.
Source: New Mexico Workers’ Compensation Administration
New York
Nearly all employers must carry workers’ compensation insurance in New York for their employees. This includes full-time, part-time, leased workers, and even family members. Very limited exceptions exist.
You can purchase coverage commercially, through the New York state fund, or self-insure if you qualify.
Source: New York State Workers’ Compensation Board
North Carolina
Employers with three or more employees must have workers’ compensation coverage. Businesses involved in radiation-related work must carry coverage regardless of their size.
You can purchase insurance commercially or, with approval, self-insure.
Source: North Carolina Industrial Commission
North Dakota
Before hiring even one employee, all businesses must have workers’ compensation coverage in place.
Insurance is only available through the North Dakota state-administered fund. You cannot obtain private insurance or self-insure.
Source: North Dakota Workforce Safety & Insurance
Ohio
All employers, even those with one part-time employee, must have workers’ compensation insurance.
You must purchase insurance through the Ohio state-administered fund. Private insurance or self-insurance aren’t options.
Source: Ohio Bureau of Workers’ Compensation
Oklahoma
All employers must carry workers’ compensation insurance, even if they only have one part-time worker. There are some specific exemptions, including a “family of five” rule for closely held businesses.
Purchase coverage commercially, through Oklahoma’s state fund, or self-insure with approval.
Source: Oklahoma Workers’ Compensation Commission
Oregon
Any business with one or more employees must have workers’ compensation coverage. You can purchase coverage commercially, through Oregon’s state fund, or self-insure if your business is approved.
Source: Oregon Workers’ Compensation Division
Pennsylvania
Employers with one or more employees must carry workers’ compensation insurance. Specific exemptions exist, such as for some licensed professionals, domestic workers, and more.
Purchase insurance from a commercial provider through Pennsylvania’s state fund or self-insure if approved.
Source: Pennsylvania Department of Labor and Industry
Rhode Island
Employers with four or more employees are required to have workers’ compensation insurance. Purchase coverage commercially, through Rhode Island’s state fund, or self-insure with approval.
Source: Rhode Island Department of Labor and Training
South Carolina
Employers with four or more regular employees must have workers’ compensation insurance. Purchase coverage from a commercial provider or self-insure with approval.
Source: South Carolina Workers’ Compensation Commission
South Dakota
All employers, regardless of the number of employees, must carry workers’ compensation insurance. Coverage is available through commercial carriers or, if qualified, through self-insurance.
Source: South Dakota Department of Labor & Regulation
Tennessee
Construction and coal mining businesses, along with any employer with five or more employees, must carry workers’ compensation insurance. You can purchase coverage commercially or self-insure if approved.
Source: Tennessee Department of Labor & Workforce Development
Texas
Most employers are not legally required to carry workers’ compensation insurance. A notable exception is construction companies with government contracts.
If you choose to carry coverage, you can purchase it commercially, through the Texas state fund, or self-insure with approval.
Source: Texas Department of Insurance
Utah
All employers must have workers’ compensation insurance to cover their employees. This includes directors, corporate officers, and members of LLCs, although they can opt out. You can purchase coverage commercially, through Utah’s state fund, or self-insure if approved.
Source: Utah Labor Commission
Vermont
All businesses with one or more employees must carry workers’ compensation insurance. Coverage can be purchased commercially or if qualified, you can self-insure.
Source: Vermont Department of Labor
Virginia
Any business with two or more employees must carry workers’ compensation insurance. Coverage is optional for smaller businesses. Purchase coverage through a commercial provider or self-insure with approval.
Source: Virginia Workers’ Compensation Commission
Washington
All employers with one or more employees must carry workers’ compensation insurance. You must obtain coverage through Washington’s state-administered fund. Private insurance or self-insurance aren’t allowed.
Source: Washington State Department of Labor & Industries
West Virginia
Nearly all employers must carry workers’ compensation insurance. There are limited exceptions. You can purchase coverage commercially, through West Virginia’s state fund, or self-insure with approval.
Source: West Virginia Offices of the Insurance Commissioner
Wisconsin
Employers with three or more employees must have workers’ compensation insurance. Farmers have specific rules to follow. You can purchase coverage commercially or self-insure if approved.
Source: Wisconsin Department of Workforce Development
Wyoming
All employers must carry workers’ compensation insurance for their employees. You must obtain coverage through Wyoming’s state-administered fund. Private insurance and self-insurance are not permitted.
Source: Wyoming Department of Workforce Services - Workers’ Compensation
Let Mosey Simplify Compliance
Workers’ compensation laws can feel nothing short of overwhelming. That’s why it’s important to stay up-to-date on state-by-state regulations and let Mosey streamline your payroll compliance. With Mosey, you can organize your workers’ compensation accounts and focus on what matters most — running your business. Book a demo today.
