Workers’ Compensation 101

Workers' compensation insurance hero

Question 4

Do workers’ compensation requirements differ by state?

Yes! Most states require coverage if a business has one or more employees. However, workers’ compensation laws and regulations differ by state.


Workers' Compensation Requirements

Mandatory Coverage States:

Require workers’ compensation insurance coverage once you hire your first employee. In addition, if you utilize subcontractors that don’t have workers’ compensation insurance, your business would be responsible for the medical and indemnity aspects of work-related injuries to the subcontractor.


Monopolistic States:

Require businesses to buy coverage exclusively through state-operated plans. These include Ohio, North Dakota, Washington, and Wyoming.


Elective Coverage States:

Coverage is elective if the employer has less than a specified minimum number of employees. These states include – Alabama, Arkansas, Florida, Georgia, Mississippi, Missouri, New Mexico, North Carolina, South Carolina, Tennessee, Virginia, and Wisconsin. (Minimums vary by state.) Strict reporting requirements are placed on the business owner with stiff penalties for noncompliance.


For example

In Texas, businesses are not required to acquire a workers’ compensation policy to cover work-related injuries. However, employers are responsible for medical and other expenses if there is a workplace injury or illness.


State Disability

Some states require employers to provide disability benefits coverage to employees for an injury or illness that occurs outside of work, or if they become disabled due to pregnancy. Disability benefits include cash payments only - employers and insurance carriers are not responsible for medical care.

Next Question: Who is covered?

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