BusinessInsurance

Here Are the US States Where Workers Compensation is Required by Law (and their Details)

US states where workers compensation law is compulsory

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.

New Hampshire

Any business with one or more employees must provide workers 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?

How to buy workers compensation insurance in America

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.

Emenike Emmanuel
Emenike Emmanuel is a multiple award-winning blogger, CEO of Entrepreneur Business Blog, Chief Evangelist of Ebusinessroom Ventures, and the Lead Coach of an online community of over 12,000 business owners called, The Excellent Entrepreneurs' Network. He’s here to help you start, manage and grow a profitable and sustainable business using digital marketing strategies. Follow him on Facebook, Twitter, Instagram, LinkedIn & Pinterest with this handle, @emenikeng. Telegram group - t.me/yourfirst1000 | Email: [email protected]

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