Workers’ Compensation: State by State Guide
Carl Niedbala
COO & Co-Founder
COO & Co-Founder
Although workers’ compensation insurance is one of the most crucial policies a company can purchase, many businesses gamble by going without — even when state law mandates it. However, successful businesses know that protecting themselves and their employees means complying with local, state, and federal laws. Here’s a closer look at workers’ compensation insurance and how to abide by your state’s rules.
It was over 100 years ago that the first attempt at workers’ compensation insurance took flight. Back in 1884, it was known as Worker’s Accident insurance. Today, workers’ compensation, also known as workman’s comp, continues to benefit the employee. More importantly, it’s insurance for employers. Let’s review some details regarding this particular coverage.
If an employee is injured or becomes ill because of their job, workers’ compensation insurance responds to cover their lost wages and medical expenses. As mentioned, this particular coverage mostly benefits the employee — but it’s vital insurance for employers.
When an employee experiences a work-related injury or illness, employers and injurers typically have a limited time frame — typically 14 to 30 days — to look further into the situation and process the claim. Insurance carriers can either approve or deny the claim. Workers’ compensation insurance covers disability benefits, including the following:
In the United States, 49 of the 50 states must carry workers’ compensation insurance. Texas is the only state that doesn’t mandate its businesses to purchase this coverage. That said, it’s safe to say that your business most likely needs workers’ compensation to comply with state laws — and protect your employees.
Undoubtedly. In some states, not having workers’ compensation is a criminal offense. Most states charge penalties and fines for noncompliance, and yet, the severity of the charges depends on that particular state.
Avoiding such penalties requires employers to know their state’s laws and comply with them wholly. Additionally, companies will also face fines if they misrepresent information, such as employee headcount or job types. Honesty is your best bet to sidestep fines and sanctions.
Just as each state sets its workers’ compensation requirements, each state approaches ways to offer the policy, too. Here are the three types of state categories in the US:
Naturally, local laws and job type (i.e., high-risk jobs) also influence how states regulate workers’ compensation insurance. Some states experience higher claim payout than others, which affects workers’ compensation rates, as well.
Depending on the company’s unique situation, the price for workers’ compensation can vary widely. Keep in mind that each state establishes its workers’ compensation rates, even though the US standardizes classification codes across the nation. As imagined, calculating premiums is unique, mostly because it depends heavily on the state.
Nevertheless, the fundamental estimation is:
Premium = (Payroll/$100) x Class Code Rate x Experience Modification Rate
For example, at a workers’ compensation rate of $1.25, a business with $100,000 in payroll can expect to pay around $1,250 in annual premiums. Though, employers can only review an exact quote from an insurance carrier.
Aside from contractors, every business in Alabama with five or more employees must provide coverage.
Employers that fail to provide coverage could face fines of $1,000 per employee for every day without coverage. They might also have to close their business until they comply or even face jail time.
Employers can self-insure if they meet the state-dictated stipulations or purchase a policy from a private insurance carrier. The Alabama Assigned Risk Pool also offers coverage, especially for high-risk businesses.
As the program administrator, the Alabama Department of Labor, Workers’ Compensation Division provides policy details.
Unless approved to self-insure, any business with one or more employees must have this policy.
With fines up to $10,000 and one year of jail time, or even business closure until coming into compliance, the penalty for noncompliance is steep in Alaska. Also, companies might face penalties of $1,000 per employee for each day without coverage.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can buy coverage from competitive state funds.
The Alaska Department of Labor and Workforce Development serves as the program administrator and provides policy details.
Any company with one or more employees, whether full- or part-time, must obtain coverage.
If a business is noncompliant, it might face fines from $1,000 to $10,000. Companies could also face multiple penalties after being sued by an uninsured and injured worker.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The program administrator is the Industrial Commission of Arizona and provides more details about workers’ compensation insurance.
Any business with three or more employees must provide coverage.
If a business doesn’t purchase coverage, it will pay state penalties. Plus, the Arkansas Workers’ Compensation Commission will no longer protect the company.
Companies can purchase this coverage from private insurance carriers.
Serving as the program administrator, the Arkansas Workers’ Compensation Commission provides more details about workers’ compensation insurance.
Any business with one or more employees must provide coverage.
California views noncompliance as a criminal offense, often resulting in jail time. It will force your company to close down until coming in compliance, facing penalties up to $10,000 or more for violation of the shut-down order. Companies could also face multiple penalties after being sued by an uninsured and injured worker.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
As the program administrator, the California Department of Industrial Relations, Division of Workers’ Compensation can provide more coverage details.
Any business with one or more full- or part-time employees must purchase coverage.
A noncompliant business could face a cease and desist order on top of daily fines from $250 to $500 per employee daily.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The Colorado Department of Labor and Employment serves as the program administrator and provides more policy details.
Any business with one or more full- or part-time employees must obtain coverage.
Businesses that fail to comply with state regulations will face a stop-work order until the premium is paid. Plus, employers will be fined $300 per employee per day.
Companies can purchase this coverage from private insurance carriers.
The State of Connecticut Workers’ Compensation Commission serves as the program administrator and provides more details.
Any business with one or more employees must provide coverage.
Companies who fail to comply with state regulations could face fines three times the amount equal to the annual insurance premium.
Companies can purchase this coverage from private insurance carriers.
The program administrator is the Delaware Division of Industrial Affairs and can provide more details.
Any business with four or more employees must purchase coverage.
Noncompliant businesses could be issued a stop-work order until coming into compliance. Plus, they face fines equal to twice what their annual premium would be for two years.
Companies can purchase this coverage from private insurance carriers.
The Florida Division of Workers’ Compensation is the program administrator and provides more details.
Any business with three or more employees must provide coverage.
Businesses that fail to comply with state regulations could face hefty criminal and civil penalties. If an uninsured and injured employee sues a company, the company will likely have to pay for legal fees, civil penalties from $100 to $1,000 per violation, medical expenses, and partial compensation. Additionally, businesses that refuse to comply could face fines from $1,000 to $10,000 or up to a year in jail.
Companies can purchase this coverage from private insurance carriers.
The program administrator is Georgia’s State Board of Workers’ Compensation, and it provides more detailed information.
Whether full- or part-time, permanent or temporary, any business with one or more employees must purchase coverage.
Noncompliant businesses could face daily fines of up to $100 per employee. Plus, these companies are vulnerable to employee lawsuits.
Companies can purchase this coverage from private insurance carriers.
The State of Hawaii Disability Compensation Commission serves as the program administrator and can provide more details.
Any business with one or more part-time, full-time, seasonal, and occasional employees must purchase coverage.
Noncompliant businesses are responsible for employee injuries and all the typical workers’ compensation benefits. They could also face 10% penalties for medical coverage, lost wages, and legal fees involving the injured employee. Additionally, noncompliant businesses might face a daily $2 per employee fine or $25 per day fine, whichever is more significant.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The Idaho Industrial Commission is the program administrator and provides more details.
Any business with employees must purchase coverage.
Businesses failing to comply with state regulations face daily fines of $500 for each day of noncompliance. They might also face up to three years of jail time and up to $25,000 in fines.
Companies can purchase this coverage from private insurance carriers.
Jurors
Real estate brokers
Farmers
The Illinois Workers’ Compensation Commission is the program administrator and provides more details.
Any business with employees must purchase coverage.
Noncompliant businesses can face daily fines up to $50 per employee and stop-work orders until coming into compliance. They might also face up to one year of prison time and fines up to $5,000.
Employers can purchase this policy from private carriers or self-insure. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can buy coverage from the Indiana Assigned Risk Pool.
The Workers’ Compensation Board of Indiana serves as the program administrator and provides more details.
Any business with employees must provide coverage.
Noncompliant businesses can face penalties up to $1,000 and awards up to 50% of the injured employee’s additional benefits.
Employers can purchase this policy from private carriers or self-insure. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from the Iowa Assigned Risk Pool.
The Iowa Division of Workers’ Compensation serves as the program administrator and provides more information.
Any business with employees must purchase coverage.
Noncompliance businesses could face stop-work orders and also civil penalties or $25,000 or double their premium, whichever is more significant.
Employers can purchase this policy from private carriers or self-insure. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from the Kansas Assigned Risk Pool.
Serving as the program administrator, the Kansas Department of Labor provides more information.
Any business with one or more employees must provide coverage.
Businesses that fail to comply with state regulations could face daily fines of $1,000 per employee, stop-work orders, and jail time.
Employers can purchase this policy from private carriers or self-insure. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can buy coverage from the state’s assigned risk residual market.
The Kentucky Department of Workers’ Claims serves as the program administrator and provides more information.
Any business with one or more employees must provide coverage.
Noncompliant businesses could face fines up to $10,000 in total — $250 per employee for the first violation and $500 per employee for the next offense. They might also face jail time and stop-work orders until coming into compliance.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
Serving as the program administrator, the Louisiana Workforce Commission provides more details.
Any business with one or more employees must obtain coverage.
Businesses that fail to comply with state regulations could face up to $10,000 or 108% of the premium (they should have been paying), whichever is more significant. They could also lose their business license or corporate charter. Furthermore, they’ll also be liable for the medical and death benefits of their employees.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The Maine Workers’ Compensation Board serves as the program administrator and provides more details.
Any business with one or more employees must purchase coverage.
Noncompliant businesses could face fines up to $10,000, for which the company’s officers and directors will be liable.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The Maryland Workers’ Compensation Commission serves as the program administrator and provides more details.
Any business with one or more employees must obtain coverage.
Noncompliant businesses could face daily fines of $100 and stop-work orders. However, if the company appeals the stop-work order, they might be allowed to stay open — but the daily fine hikes up to $250.
Companies can purchase this coverage from private insurance carriers.
The Massachusetts Office of Industrial Accidents serves as the program administrator and provides more information.
Any business with three or more employees must purchase coverage.
Businesses that fail to comply with state regulations could face jail time and fines up to $1,000. Also, the state can prevent the company from hiring any new employees until it comes into compliance.
Companies can purchase this coverage from private insurance carriers.
Serving as the program administrator, the Michigan Workers’ Compensation Agency provides more information.
Any business with employees must purchase coverage.
Noncompliant businesses could face weekly fines of up to $1,000 per employee. Additionally, if an injured and uninsured employee sues the company, the state could require it to pay for the employee’s compensation benefits and a penalty (65% of the benefits). Furthermore, the state can prevent the company from hiring new employees until coming into compliance.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The Minnesota Department of Labor and Industry serves as the program administrator and provides more information.
Any business with five or more employees must obtain coverage.
Noncompliant businesses could face fines of up to $1,000 and one year of jail time. They also might be required to pay benefits for injured and uninsured employees.
Companies can purchase this coverage from private insurance carriers.
The Mississippi Workers’ Compensation Commission serves as the program administrator and provides more details.
Any business with five or more employees must obtain coverage.
Noncompliant businesses could face a penalty of three times the insurance premium they should have been paying up to $50,000. If an employee were injured, the company would also be required to pay for their medical expenses. The first-time noncompliance charge is a misdemeanor; the second charge could be a felony.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The Missouri Division of Workers’ Compensation serves as the program administrator and provides more details.
Any business with employees must purchase coverage.
Noncompliant businesses could face a minimum fine of $200 or twice the amount they should have been paying in premium.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
Serving as the program administrator, the Montana Department of Labor & Industry provides more information.
Any business with one or more employees must provide coverage.
Businesses that fail to comply with state regulations might face a $1,000 civil fine for every violation — each noncompliant day is a violation. Company leaders could face jail time and stop-work orders.
Companies can purchase this coverage from private insurance carriers.
The program administrator is the Nebraska State Employee Workers’ Compensation and provides more information.
Any business with one or more employees must provide coverage.
Noncompliant businesses could face a fine of up to $15,000 plus premium penalties. They will also likely face stop-work orders and be liable for work-related injuries to uninsured employees.
Companies can purchase this coverage from private insurance carriers.
Serving as program administrator, the Nevada Division of Industrial Relations provides more information.
Any business with employees must provide coverage.
Noncompliance businesses could face a one-time fine of $2,500 and $100 daily fine per employee for each day without coverage. They might also face stop-work orders until coming into compliance.
Companies can purchase this coverage from private insurance carriers.
The program administrator is New Hampshire’s Workers’ Compensation Division and provides further details.
Any business with employees must obtain coverage.
Businesses failing to comply with state regulations could face penalties up to $5,000 for the first 20 days that they don’t comply and up to $5,000 for each day after, up to ten days.
Companies can purchase this coverage from private insurance carriers.
The New Jersey Division of Workers’ Compensation is the program administrator and provides more details.
Any business with three or more employees must obtain coverage.
Noncompliant businesses could face a state-mandated shut-down.
Employers can purchase this policy from private carriers or self-insure. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from the New Mexico Assigned Risk Pool.
Serving as the program director, the New Mexico Workers’ Compensation Administration provides more details.
Any business with employees must purchase coverage.
Noncompliant businesses with five or fewer employees could face fines of $1,000 to $5,000: the more employees, the more significant the penalty.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can buy coverage from competitive state funds.
Serving as the program administrator, the New York State’s Workers’ Compensation Board provides details.
Any business with three or more employees must purchase coverage.
Businesses that fail to comply with state regulations could face a fine of one dollar per day per employee — $50 minimum and $100 per day maximum. They could also be responsible for compensation owed, lost wages, medical treatment costs, and defense fees.
Companies can purchase this coverage from private insurance carriers.
The North Carolina Industrial Commission serves as the program administrator and provides more details.
Any business with employees must purchase coverage.
Noncompliant businesses could face stop-work orders and a one-time fine of $10,000 plus $100 every day they don’t comply with state regulations. They could also be responsible for the claims expenses of the uninsured and injured employee.
All employers are guaranteed coverage because North Dakota uses a monopolistic state fund, and there is no private insurance.
The North Dakota Workforce Safety and Insurance serves as the program administrator and provides more information.
Any business with one or more employees must provide coverage.
Businesses who fail to comply with state regulations, including keeping up with the payment schedule, could face a fine of 1% of the premium if late or $30 and up to 15% of the premium due.
All employers are guaranteed coverage because Ohio uses a monopolistic state fund, and there is no private insurance.
The Ohio Bureau of Workers’ Compensation is the program administrator and provides details.
Any business with employees must obtain coverage.
Noncompliant businesses could face daily fines of $1,000 and stop-work orders until coming into compliance. They will also be responsible for lawsuits from uninsured and injured employees.
Employers can purchase this policy from private carriers or self-insure. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can buy coverage from the Oklahoma Assigned Risk Pool.
The Oklahoma Workers’ Compensation Commission serves as the program administrator and provides more information.
Any business with one or more employees must provide coverage.
Businesses that fail to comply with state regulations could face a minimum fine of $1,000 or twice the amount of the premium they should have been paying. Additional fines of $250 each day of noncompliance and jail time could follow.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The Oregon Workers’ Compensation Division serves as the program administrator and provides further information.
Any business with one or more employees must purchase coverage.
Noncompliant businesses could face a fine from $2,500 to $15,000, depending on whether the act was intentional. Also, they could face jail time and up to seven years in prison. The state’s fund will cover any benefits for employees during the business’s noncompliance timeframe; however, the company will have to pay the state back, including interest, fees, and additional penalties.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
Serving as the program administrator, the Pennsylvania Department of Labor and Industry provides further guidance.
Any business with one or more employees must obtain coverage.
Noncompliant businesses could face a fine of $250 plus an additional $1,000 every day they don’t comply. It could lead to up to two years in prison, a $10,000 fine, and stop-work orders until coming into compliance.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The Rhode Island Department of Labor and Training serves as the program administrator and provides more details.
Any business with four or more employees must purchase coverage.
Noncompliant businesses could be forced to cover all claim costs for all uninsured and injured employees.
Companies can purchase this coverage from private insurance carriers.
The South Carolina Workers’ Compensation Commission serves as the program administrator and provides more details.
Any business with employees must purchase coverage.
Businesses that fail to comply with state regulations could face legal action from uninsured and injured employees, including medical expenses, plus double the amount of disability income or death benefits.
Companies can purchase this coverage from private insurance carriers.
The South Dakota Department of Labor and Regulation serves as the program administrator and provides further information.
Any business with five or more employees must purchase coverage.
Businesses that fail to comply with state regulations could face $10,000 or more in penalties. They could also face a 25% penalty to an uninsured and injured employee.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can buy coverage from the NCCI as it manages the Tennessee Workers’ Compensation Insurance Plan.
Serving as the program administrator, the Tennessee Department of Labor and Workforce provides further guidance.
Texas is the only state that doesn’t mandate workers’ compensation; it’s optional.
Noncompliant businesses won’t face any penalties; however, they’re required to provide a safe work environment. Nevertheless, if a company chooses to purchase coverage and fails to comply with its requirements, it could face administrative penalties.
Employers can purchase this policy from private carriers. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The Texas Department of Insurance serves as the program administrator and provides more guidance.
Any business with employees must obtain coverage.
Noncompliant businesses could face $1,000 penalties, a legal injunction, and liability for benefits of uninsured and injured employees.
Employers can purchase this policy from private carriers or self-insure. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from competitive state funds.
The Utah Labor Commission is the program administrator and provides more information.
Any business with one or more employees must purchase coverage.
Businesses that fail to comply with state regulations could face a $100 per day penalty up to $5,000 and stop-work orders.
Employers can purchase this policy from private carriers or self-insure. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can purchase coverage from the Vermont Assigned Risk Pool.
Serving as the program administrator, the Vermont Department of Labor provides more details.
Any business with two or more employees must purchase coverage.
Noncompliant businesses could face a daily civil penalty of $250 for every uninsured day, up to $50,000.
Employers can purchase this policy from private carriers or self-insure. Also, if the business is unable to buy coverage from a private carrier due to it being a high-risk company, it can buy coverage from the Virginia Assigned Risk Pool.
The Virginia Workers’ Compensation Commission is the program administrator and provides details.
Any business with one or more employees must purchase coverage.
Noncompliant businesses could face a daily civil penalty of $250 for every uninsured day, up to $50,000.
All employers are guaranteed coverage because North Washington uses a monopolistic state fund, and there is no private insurance.
The Washington State Department of Labor and Industries is the program administrator and provides more guidance.
Any business with three or more employees must purchase coverage.
Businesses that fail to comply with state regulations could face a fine of $500 or more for the initial offense and up to $25,000 for offenses thereafter. They also face a stop-work order, late penalties, and interest for unpaid compensation contributions.
Companies can purchase this coverage from private insurance carriers.
The state of West Virginia is the program administrator and provides further details.
Any business with three or more employees must purchase coverage.
Noncompliant businesses could face a fine of $750 or double the amount of the premium they should have been paying, whichever is more significant. They could also face a stop-work order and be held financially responsible for the benefits of uninsured and injured employees.
Companies can purchase this coverage from private insurance carriers.
Serving as the program administrator, the Wisconsin Department of Workplace Development provides further guidance.
All businesses with employees must purchase coverage.
Businesses that fail to comply with state regulations could face fines, stop-work orders, jail time, and legal liability for uninsured and injured employees.
All employers are guaranteed coverage because Wyoming uses a monopolistic state fund, and there is no private insurance.
Serving as the program administrator, the Wyoming Department of Workforce Services provides details.
Understanding the details of what coverage your company needs can be a confusing process. Founder Shield specializes in knowing the risks your industry faces to make sure you have adequate protection. Feel free to reach out to us, and we’ll walk you through the process of finding the right policy for you.
Want to know more about Workers’ Compensation insurance? Talk to us! You can contact us at info@foundershield.com or create an account here to get started on a quote.
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