Workers’ compensation insurance requirements vary by state in the U.S., reflecting diverse legal and labor environments. Each state sets its own criteria for mandatory coverage, which can include factors like the number of employees a business has. For example, in North Carolina, businesses with three or more employees are required to carry workers’ compensation insurance. These state-specific rules ensure tailored protection in line with local economic and labor conditions.
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Workers compensation insurance is a critical aspect of business operations across the United States. It provides essential protection for both employees and employers in the event of a workplace injury or illness.
However, the requirements for workers compensation insurance vary significantly from state to state, creating a complex landscape for businesses operating in multiple jurisdictions.
This comprehensive guide aims to demystify these varying state requirements, helping employers ensure they meet their legal obligations.
Workers’ compensation insurance requirements in the United States are governed by state-specific regulations, reflecting the diverse economic and labor landscapes across the country. These regulations vary considerably, affecting how businesses in different states approach workers’ compensation.
Key areas of variation include the threshold number of employees that trigger the need for insurance, the scope of coverage, and the types of workers or industries that may be exempt.
For example, some states require all businesses with even one employee to carry workers’ compensation insurance, while others set higher thresholds.
The definition of an ’employee’ can also vary, with some states offering more inclusive definitions than others. Additionally, certain states have unique provisions for industries like agriculture or construction, recognizing the specific risks associated with these sectors.
In terms of coverage, states differ in how they handle claims related to stress or repetitive injuries, and in the benefits offered, such as medical expenses, disability payments, and rehabilitation services. This reflects the varied approaches to worker safety and employer liability across the nation.
You can read more of our blogs about workers compensation insurance for more information.
In North Carolina, businesses with three or more employees generally must have workers’ compensation insurance. This includes corporations, sole proprietorships, and limited liability companies.
Non-compliance can lead to severe penalties, including financial fines and criminal charges. Trucking companies and their operators are typically required to carry workers’ compensation insurance, aligning with the state’s regulations for businesses with employees.
In North Carolina, workers’ compensation laws mandate coverage for certain trucking owner/operators, even those classified as independent contractors.
Should an owner-operator lack personal workers’ compensation insurance, the responsibility falls to the motor carrier to provide it.
This requirement is independent of the number of employees a principal contractor, intermediate contractor, or subcontractor has.
However, a motor carrier is not liable for injuries to an independent contractor who is licensed by the U.S. Department of Transportation and personally operates the vehicle, as outlined in N.C. Gen. Stat. § 97-19.1.
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 |
DID YOU KNOW? There are some states where you can’t purchase works comp insurance from Private Insurance Carriers! These state operate under “Monopolistic State Funds.” This means that businesses in these states, such as North Dakota, Ohio, Washington, and Wyoming, must purchase workers’ compensation insurance exclusively from state-run funds, with no option to buy from private insurers.
In the realm of workers’ compensation insurance, “Monopolistic State Funds” is a term used to describe states where workers’ compensation insurance must be purchased from a state-operated fund. In these states, private insurance carriers do not provide workers’ compensation coverage.
This system is unique to a select few states, including Washington, Wyoming, Ohio, and North Dakota. Businesses operating in these states must navigate different procedures and policies compared to those in states where private insurance options are available.
Monopolistic State Funds, where workers’ compensation insurance is solely provided by state-run funds in North Dakota, Ohio, Washington, and Wyoming, offer both advantages and disadvantages.
No, all states except Texas require employers to have workers compensation insurance. Texas allows employers to opt out, but this comes with certain risks.
Yes, workers compensation insurance is a mandatory requirement in all U.S. states except Texas. However, the specifics of these requirements vary significantly from state to state.
In North Carolina, businesses with fewer than three employees, certain agricultural operations, and domestic servants may be exempt from the requirement to carry workers compensation insurance.
No, workers compensation is not the same in every state. Each state has its own laws and regulations, which can differ in terms of coverage requirements, benefits offered, and exemptions.
Navigating the workers compensation insurance requirements in different states can be a complex task for business owners.
It’s essential to understand the specific regulations in each state where your business operates to ensure compliance and provide adequate protection for your employees. Consulting with an insurance expert can be invaluable in this process.
For personalized guidance and to ensure your business meets all necessary workers compensation insurance requirements, don’t hesitate to contact an ALLCHOICE Insurance Advisor. Their expertise can help you navigate the complexities of state-specific regulations and find the best coverage options for your business needs.
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