Workers Compensation Laws by State

Workers Compensation State Laws

As a small business owner, you’ve probably figured out there is a long list of insurance options available to protect your assets. The list can be overwhelming -- commercial property, general liability, commercial auto, cyber liability, employment practices, and let’s not forget workers compensation insurance.

For many businesses, workers compensation is difficult to embrace, especially if you have a small workforce that doesn’t spend their day involved in risky tasks.

3 Things You Need to Know about Workers Comp

1. It’s required in most states. The majority of states require businesses to purchase workers compensation insurance. Some require workers comp for every business and some base the requirement on the number of employees. There are a select few states like Texas and Oklahoma that let the employer decide if they want to purchase coverage.

2. Monopolistic states prohibit private workers comp insurers. There are currently four monopolistic states: Ohio, Wyoming, Washington, and North Dakota. These states do not allow private insurance companies to sell workers compensation insurance to businesses. Instead, businesses must purchase workers comp from the state fund or declare themselves self-insured.

3. There are serious fines associated with noncompliance. Deciding to skip buying workers compensation insurance to save a few dollars is risky. Most states impose on noncompliant businesses a fine or penalty. The cost of the fine varies by state, the number of employees, the length of noncompliance time, and the reason you were without coverage.

States With Severe Penalties

In some states, the penalties for not providing workers' compensation insurance are steep.

• California: You could face up to a year in jail, a fine of up to $10,000, or both.
• New York: You could face a misdemeanor or felony charge with fines up to $50,000.
• Pennsylvania: The penalty for not having Workers Comp is categorized as a third-degree felony with up to seven years of jail time;
• Illinois: Employers pay $500 per day when not in compliance with a $10,000 minimum fine.

The cost of noncompliance can thus be high, and you will want to avoid these penalties.

Variances in Workers' Compensation Laws by State

Workers' compensation laws and requirements by state vary.

Exceptions for small businesses: A number of states grant exceptions when you have a small business.

• Florida: If your company has less than four employees, then you do not need workers' compensation insurance unless you are in the construction industry.
• Texas: Texas law allows most employers the choice of whether to provide workers' compensation insurance, but it does require it if you obtain a construction contract with the government.

Exemption for domestic employees: Another category of exemption is domestic employees:

• Connecticut: Connecticut offers an exemption for those who work less than 26 hours per week.

Self-insure options:

• Pennsylvania and New Jersey offer you the right to provide protection on your own, but with specific requirements to be met. So, you will want to look into the requirements by state.

Pay-as-you-go: Pay-as-you-go options are also available for businesses in a number of states. Additionally, there are state workers' compensation funds you may want to look into.

Workers’ Compensation Laws by State

• Alabama: Most people are covered, except for such workers as domestic servants, farm laborers, and casual employees.

• Alaska: Most people are covered, except for such workers as babysitters and domestic servants.

• Arizona: Most people are covered, except for such workers as independent contractors.

• Arkansas: Anyone, including a minor. Exceptions: Agricultural laborers

• California: Most everyone, except domestic employees.

• Colorado: Most everyone, except inmates.

• Connecticut: Most everyone, except for business partners.

• Delaware: Everybody, except a spouse and minor children of a farm employer.

• District of Columbia: Everyone, including a minor. Exception: Someone whose employer is an uninsured subcontractor

• Florida: Most people are covered, except for independent contractors and bands, to name a few.

• Georgia: Most people are covered, except for rail carriers in interstate commerce.

• Hawaii: Anyone, except for contractors.

• Idaho: Anyone. Exception: Domestic servants and casual workers.

• Illinois: Most everyone, except real estate brokers.

• Indiana: Most people are covered, except for firemen.

• Iowa: All people, except such positions as household workers.

• Kansas: Anyone

• Kentucky: All people, except for those with less than two domestic workers and some private maintenance and installation workers.

• Louisiana: Most people are covered, except for musicians.

• Maine: Anyone. Exception: Independent contractors

• Maryland: Anyone on regular payroll. Exception for independent contractors

• Massachusetts: Most people are covered, except for those working on vessels in interstate commerce.

• Michigan: Anyone, except for some agricultural employees.

• Minnesota: Anybody usually, except for farmers or family members.

• Mississippi: All people, including minors. Exception for independent contractors.

• Missouri: Anyone, except operators of trucks involved in interstate commerce.

• Montana: Most all employees, with exceptions for casual employment.

• Nebraska: Anyone, except domestic servants and agricultural employees.

• Nevada: Most everyone, except theatrical performers and musicians.

• New Hampshire: Anybody, except railroad employees in interstate commerce.

• New Jersey: Most everyone, but independent contractors.

• New Mexico: Most all employees. Exceptions: Farm workers

• New York: Most everyone, except domestic workers with less than 40 hours per week.

• North Carolina: Anybody, but casual employees.

• North Dakota: Anybody, but independent contractors.

• Ohio: Any person employed.

• Oklahoma: Any person, except horticulture workers.

• Oregon: Any person, but inmates.

• Pennsylvania: All people, except casual employees.

• Rhode Island: Anyone, except those employed by the State of Rhode Island.

• South Carolina: All people, except casual employees.

• South Dakota: All people, except casual employees and independent contractors.

• Tennessee: All people, except some undocumented workers.

• Texas: Most all workers, with exceptions for independent contractors.

• Utah: Most all workers, with exceptions for real estate brokers.

• Vermont: Most everyone, except those considered casual employees.

• Virginia: All people with an exception for those not considered part of the normal business.

• Washington: Most all employees. Exception: Licensed electricians

• West Virginia: All people, except domestic servants.

• Wisconsin: All people, except domestic servants.

• Wyoming: All people, except those considered casual employees.

It's Best to Get Some Help

As you can see, determining the scope of workers' compensation coverage can be overwhelming, and it will take some time to review your particular requirements. If these resources do not provide enough answers, it's best to reach out for some help from CoverWallet.

Keep in mind that those who are self-employed or are the sole proprietor may have different requirements for workers' compensation. Those who are with a start-up company may also need some guidance when it comes to workers' comp. CoverWallet can help businesses with things like understanding class codes and all aspects of workers' comp.

There is an online contact form on our website, and we can be reached at (646) 844-9933. We can help answer any questions you may have about things like workers' compensation state funds and more. Contact us today.