What Are The Workers Compensation Insurance Requirements By State?

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.

Understanding Workers Compensation Insurance Requirements By State

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.

State-Specific Regulations

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.

A Close Look at Key States

  1. California: Known for stringent labor laws, mandates coverage for all businesses with employees, with unique provisions for temporary disability and rehabilitation.
  2. Texas: Unique in its approach, allows employers to opt out of workers’ compensation, a decision that comes with its own set of risks.
  3. North Carolina: Requires insurance for businesses with three or more employees, with exemptions for certain agricultural businesses and domestic servants.
  4. New York: Requires coverage for all employees, including part-timers and family members, with specific regulations for construction and demolition sectors.

You can read more of our blogs about workers compensation insurance for more information.

North Carolina Workers Compensation Requirements

In North Carolina, businesses with three or more employees generally must have workers’ compensation insurance. This includes corporations, sole proprietorships, and limited liability companies.

Exceptions To The North Carolina Workers Compensation Requirements

  • Certain railroad employees
  • Domestic servants directly employed by households
  • Farm laborers when fewer than 10 full-time, non-seasonal farm laborers are regularly employed by the same employer, and
  • federal government employees in North Carolina
  • sellers of agricultural products for the producers thereof on commission or for other compensation, paid by the producers, provided the product is prepared for sale by the producer

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.

Are Trucking Companies And Operators Required To Carry Workers Comp?

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’ 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

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.

Monopolistic State Funds

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.

Pros Of Monopolistic State Funds

  1. Consistency: These funds ensure uniform coverage and claims processing standards.
  2. Regulatory Control: The state’s direct control can lead to more stable rates and focused oversight.

Cons Of Monopolistic State Funds

  1. Lack of Choice: Businesses cannot shop around for potentially better rates or customized coverage from private insurers.
  2. Coverage Limitations: Some state funds may not offer as broad coverage as private insurers, possibly necessitating additional insurance for certain liabilities.

People Also Ask - Workers Compensation Insurance Requirements By State

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.

The Final Verdict - Workers Compensation Insurance Requirements By State

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.

How to get Workers Compensation Insurance

New ALLCHOICE customers:
Current ALLCHOICE clients:

Check out the Member Center or call us at 1-844-540-0463 to see if product is availbale and included in your policy.