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Return To: Workers Compensation Insurance – The Ultimate Guide
Not having workers’ compensation insurance puts your business and your employees’ lives at risk. In 2019, the leading cause of workplace deaths was transportation-related accidents.
Taking advantage of workers compensation insurance keeps both your business and employees protected. It also saves you from unnecessary penalties for violating state laws.
Keep reading to learn the workers compensation insurance requirements by state including why you should comply with workers’ compensation insurance law.
Workers Compensation Insurance: What It Is and Why You Need It
Workers’ compensation insurance covers medical expenses and lost wages of employees who experience work-related illness or injury. This insurance can cover the following:
- Medical expenses
- Other ongoing healthcare costs
- Lost wages
- Funeral expenses
- Death benefits
If you have at least one employee, you need to get workers’ compensation insurance to protect your employees and follow state laws. Workers comp insurance also helps you avoid huge expenses and liabilities in your business.
Workers’ compensation insurance has no standard minimum premium. However, it may range from $600 to $1,500 per year.
The coronavirus is covered by workers’ compensation insurance under specific circumstances. For instance, an employee who travels overseas for business and contracts COVID-19 can be covered.
For business insurance, coverage may include loss of home insurance, cyber liability and data breach, and employment practices liability insurance. The minimum premium may range from $350 to $750 per annum.
Small business owners can take advantage of merit rating credits depending on each state. If you are paying a $5,000 premium or less, you may get a credit of 5 to 15%, given that you haven’t had any lost-work-time claims during a certain period.
Workers’ Compensation Insurance Law per State
Workers’ comp insurance requirements differ for each state. Refer to the following table for an overview of all state workers’ compensation insurance:
| State | Minimum no. of employees | Individuals not covered |
| Alabama | 5 | Casual employees, real estate brokers, and domestic servants |
| Alaska | 1 | Domestic servants, contract entertainers, and part-time babysitters |
| Arizona | All employers | Independent contractors and casual employees |
| Arkansas | 3 | Casual employees, state employees, and agricultural farm laborers |
| California | 1 | Deputy clerks, individuals offering voluntary services for a non-profit recreational camp, and domestic employees employed by a family member |
| Colorado | 1 | Volunteers and drivers having a lease agreement with a contract carrier |
| Connecticut | 1 | Casual employees and independent contractors |
| Delaware | 1 | Casual employees and spouse and minor children not included in an endorsement to a farm employer’s contract of insurance |
| District of Columbia | All employers | Individuals with employers who are uninsured subcontractors can assert a claim against the general contractors |
| Florida | 4 | Independent contractors except for the construction industry, casual workers, and volunteers |
| Georgia | 3 | Domestic servants, independent contractors, and farm laborers |
| Hawaii | All employers | Primary and secondary contractors |
| Idaho | 1 | Casual employees, real estate brokers, and domestic servants |
| Illinois | All employers | Farmers and real estate brokers |
| Indiana | All employers | Casual workers, farm or agricultural employees, firemen, and household employees |
| Iowa | All employers | Household employees with less than $1,500 income during 12 months before an injury and casual employees earning less than $1,500 for 12 consecutive months |
| Kansas | All employers | Not available |
| Kentucky | 1 | Maintenance, repair, and other related workers employed in a private home |
| Louisiana | 1 | Performers under contract and employees of private residential household |
| Maine | 1 | Some agricultural employees and independent contractors |
| Maryland | 1 | Independent contractors |
| Massachusetts | 1 | Casual employees and real estate brokers |
| Michigan | 3 | Certain agricultural workers and real estate agents |
| Minnesota | All employers | Farmers exchanging work with family members or other farmers in the same community |
| Mississippi | 5 | Independent contractors |
| Missouri | 5 | Domestic servants, volunteer, and direct sellers |
| Montana | 1 | Freelance photographers, direct sellers, domestic servants, and real estate agents |
| Nebraska | 1 | Railroad workers and domestic servants |
| Nevada | 1 | Domestic servants, casual employees, and real estate agents |
| New Hampshire | 1 | Real estate brokers and direct sellers |
| New Jersey | 1 | Domestic workers and independent contractors |
| New Mexico | 3 | Real estate brokers and domestic workers |
| New York | 1 | Railroad workers and domestic servants working less than 40 hours a week |
| North Carolina | 3 | Individuals not in the course of the trade, business, or profession of their employers |
| North Dakota | All employers | Real estate agents, independent contractors, and casual workers |
| Ohio | 2 | Not available |
| Oklahoma | All employers | Real estate brokers, volunteers, domestic servants in private homes, and sole proprietors |
| Oregon | All employers | Casual employees |
| Pennsylvania | All employers | Casual workers |
| Rhode Island | All employers | Farmers, real estate brokers, and casual workers |
| South Carolina | 4 | Casual workers |
| South Dakota | All employers | Independent contractors, volunteers, and farm laborers |
| Tennessee | All employers | Certain undocumented workers |
| Texas | Workers compensation insurance optional | Federal employees and independent contractors |
| Utah | 1 | Real estate brokers |
| Vermont | 1 | Real estate brokers, casual employees, and independent contractors |
| Virginia | 3 | Individuals with employment not within the usual course of the employer’s business |
| Washington | All employers | Jockeys, domestic servants, performers, and sole proprietors |
| West Virginia | 1 | Church workers, domestic servants, and casual employees |
| Wisconsin | 3 | Domestic servants |
| Wyoming | All employers | Independent contractors, casual employees, volunteers, and federal government employees |
What Are the Penalties for Not Securing Workers’ Compensation Insurance?
Failure to fulfill workers’ compensation insurance requirements by state can lead to huge fines or jail time. Penalties depend on which state you are running your business, the total number of employees, and the period and reason for noncompliance.
Below are some penalties for workers’ compensation noncompliance in certain states:
- New York: In New York, if you have more than five employees and fail to comply with workers’ compensation insurance law, you must pay up to $50,000.
- Illinois: In Illinois, noncompliance is often considered a misdemeanor. If you intentionally failed to complete the requirements, you will be charged with a felony. Each day of noncompliance means a fine of up to $500.
- California: Failure to provide workers’ comp insurance in California is a criminal offense. Employers can face a fine not lower than $10,000, one-year imprisonment, or both. Penalty may be up to $100,000.
- New Jersey: In New Jersey, failure to comply with workers’ compensation insurance requirements is a criminal offense. You can face up to a $10,000 fine or imprisonment of up to 18 months.
- Virginia: Each day of noncompliance means a penalty of up to $250, with a maximum fine of $50,000.
Getting Workers Compensation Insurance From a State Fund
Some states require workers’ compensation state funds. This means that employers in these states should avail of workers’ compensation from the state fund known as a monopolistic state fund.
Examples of these states include Washington, Wyoming, Ohio, and North Dakota.
Secure Workers’ Compensation Insurance With Only the Best!
Working with established and reputable insurance companies, like ALLCHOICE is crucial in protecting your business and your employees. As a one-stop-shop for your insurance needs, ALLCHOICE offers workers comp insurance, auto insurance, commercial property insurance, umbrella insurance, and surety bonds.
With ALLCHOICE’s exceptional service, competitive pricing, and stable carriers, the whole process will be fast and easy. Get a workers’ compensation insurance quote now to keep your business and employees protected!