By Is workers compensation a state or federal law? There are no federal laws for workers’ compensation except you are working for the federal government in areas like coal mines, or as longshoremen.
State workers compensation law regulates businesses and employers in individual states. When you look at each state individually, most do require some form of workers’ compensation.
In this article, we will discuss how workers compensation laws differ from state to state, the only state in the US where it’s not compulsory and why, and of course, the number of employees you need to have for you to carry workers comp.
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Having discussed some of the interesting reasons why you need business insurance, below are the 50 US states, a summary of what their workers compensation law says and the similarities in their claims reporting process.
Alaska
In Alaska, employers who hire one or more employees must obtain workers’ compensation. The only exceptions are for small businesses who have been approved to self-insure their workers’ compensation claims.
Alabama
If an employer has five or more employees, then the employer must carry workers’ compensation.
Arizona
Arizona requires all of its employers, private and public, to carry workers’ compensation insurance.
Arkansas
In Arkansas, the law states that any employer with three or more employees has to have workers compensation insurance.
California
Every business operating in California even if its headquarters is in another state must provide workers compensation benefits to their employees under California Labor Code Section 3700. It is a criminal offense for any employer not to provide workers’ compensation for their employees. It’s punishable by up to a year in jail and a fine of no less than $10,000 – or both.
Colorado
There are limited exemptions, but in Colorado, public and private employees have to provide workers compensation coverage.
Connecticut
State worker’s compensation law requires all businesses with one or more employees to have workers’ compensation coverage.
Delaware
If an employer has more than one employee, then that employer has to provide workers compensation insurance. You can get your business insurance quote from a reliable agent.
District of Columbia
Any business with more than one employee has to cover its employees. The Workers’ Compensation Program processes claims and monitors the payment of benefits to injured private-sector employees in the District of Columbia.
Florida
In Florida, most industries that have more than four employees have to carry workers’ compensation coverage.
Georgia
Most employers in Georgia with three or more full-time, part-time or seasonal employees are required to have workers’ compensation insurance.
Hawaii
Most employers in Hawaii are required to carry workers’ compensation insurance for all of their employees.
Idaho
Most employers have to cover their employees with workers’ compensation.
Illinois
Illinois is yet another state that requires all of its employers to carry workers compensation coverage for every one of its employees.
Indiana
Private and public businesses have to cover their employees.
Iowa
While some employers may apply to be self-insured, most must purchase workers’ compensation insurance.
Kansas
While there are some exceptions, employers in Kansas must, in general, carry a type of workers compensation insurance.
Kentucky
In Kentucky, according to state workers compensation law, a business is obligated to provide workers compensation for all employees.
Louisiana
Employers are obligated to provide insurance to their employees.
Maine
All businesses with at least one employee have to provide insurance.
Maryland
Any business with at least one employee has to provide insurance.
Massachusetts
All employers, with no exceptions, have to offer workers compensation to their employees.
Michigan
Michigan is not exempt from workers’ compensation insurance under any circumstance.
Minnesota
In Minnesota, workers’ compensation is mandatory.
Mississippi
Employers with fewer than five employees do not have to carry workers’ compensation coverage.
Missouri
For employers with five or more employees, coverage is mandatory.
Montana
In Montana, for an employer with five or more employees, state workers’ compensation law requires coverage.
Nebraska
All businesses are legally required to have workers’ compensation coverage.
Nevada
Nevada does have self-insurance options. However, for an employer with at least one employee, coverage is mandatory. Find out more in this article where we discussed how to start a business in Nevada.
New Hampshire
Any business with one or more employees must provide worker’s compensation.
New Jersey
New Jersey requires all employers who aren’t covered by federal programs to have workers’ compensation coverage offered at the state level.
New Mexico
If an employer has three or more employees, he or she must have workers’ compensation coverage.
New York
All employers must cover their employees under workers’ compensation insurance coverage. Having the right type of business insurance policy will help you to be better positioned to deal with risks as they come.
North Carolina
Any employer with more than three employees has to have insurance coverage.
North Dakota
All employers in North Dakota must have workers’ compensation coverage.
Ohio
If an employer has more than one employee, the employer has to have coverage. Even companies running the best event centers in Ohio are not left out.
Oklahoma
According to state workers’ compensation law, it is mandatory for all employers to carry occupational injury coverage.
Oregon
By law, it is necessary for all employers to cover their employees with workers’ compensation.
Pennsylvania
It is mandatory for Pennsylvania employers to cover their employees.
Rhode Island
In most cases, Rhode Island law states that all employers must carry coverage.
South Carolina
If there are four or more employees, then an employer must have workers compensation insurance.
South Dakota
In general, most employers have to cover their employees with workers’ compensation coverage.
Tennessee
Per state workers compensation law, an employer with five or more employees has to have insurance. In some cases, an employer may use a waiver.
Texas
Texas, unlike other states, does not require an employer to have workers’ compensation coverage.
Utah
Unless the employer is an agricultural employer that makes less than $50,000, all employers must carry coverage.
Vermont
All employers must carry insurance coverage for their employees.
Virginia
Any employer with three or more full-time or part-time workers has to purchase workers’ compensation insurance.
Washington
It is mandatory for all employers to carry workers’ compensation coverage.
West Virginia
Unless the employer is an agricultural employer with fewer than five workers, all employers need workers’ compensation coverage.
Wisconsin
If your business has fewer than three employees, then you are exempt from coverage. Other than that, no industry is exempt.
Wyoming
In Wyoming, all employers have to have coverage. Some may choose to be self-insured, but not all employers can do this.
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How Do You Buy Workers Compensation Insurance in the United States?
While the claims reporting process is the same, be it state or federal workers’ comp, there are basically three ways to purchase workers compensation insurance in the United States. Your business can buy from:
- Private insurance companies
- Monopolistic state funds
- Competitive state funds
The method you chose is based on what is allowed in your state.
The following 20 states in the United States allow competitive state funds: Arizona, California, Colorado, Hawaii, Idaho, Kentucky, Louisiana, Maine, Maryland, Minnesota, Missouri, Montana, New Mexico, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Utah.
Are there states that don’t allow businesses to purchase workers’ compensation policies from private insurance providers?
The answer is yes. States like North Dakota, Washington, Ohio and Wyoming do not allow businesses operating in their territory to purchase workers compensation coverage from private insurance companies.
In subsequent articles, we will discuss the full details of the workers compensation requirements and their statutory limits across state lines.
