insurance laws
insurance laws

clock February 7, 2020

file Blog

Workers Compensation Insurance Laws: A State-by-State Guide

Hiring your first employee is a milestone for your business. With great power, though, comes great responsibility.

If you’ve hired an employee, then it’s time to start researching your state’s laws. You need to ensure your business remains compliant with worker’s compensation insurance laws. In most states, that means buying insurance.

Read on to get our in-depth guide to each state’s worker’s compensation insurance laws.


In Alabama, all businesses with more than five employees must buy insurance. If your business has less than that, then insurance isn’t required. There is one exception — construction businesses do need to buy it.


Alaska makes all employers who have at least one employee get insured. There are a few exceptions to this including:

  • Sole proprietors
  • Part-time babysitters
  • Non-commercial cleaners
  • Members in a managed LLC
  • Part-time or transient help
  • Harvest help
  • Contract entertainers
  • Commercial fishers
  • Taxi drivers

Executive officers can also exclude themselves if they want.


If you have at least one employee in Arizona, then you need insurance. You’ll only be exempt from coverage if employees are independent contractors or partners. Sole proprietors can opt out if they don’t have other employees.


Employers with over three employees must have coverage in Arkansas. Here are some exceptions:

  • Farm laborers
  • Real estate agents
  • Employers with two or fewer employees

Are you unsure whether your business needs insurance? Reach out to your state’s worker’s compensation board if you have questions.


California has a strict policy. All employers need to carry insurance, even if they only have one employee.

California is a coastal state. So, the Longshore and Harbor Workers’ Compensation laws may apply if you work at sea.


Colorado is another strict state — everyone with more than one employee must get coverage. On top of that, everyone who gets hired to perform a service gets considered an employee.


All businesses with more than one employee need to get insurance. Employees who work in a private home less than 26 hours a week, though, are exempt. Employees who can self-insure are also excluded.


In Delaware, all farmworkers and independent contractors are exempt. Aside from that, all employers with more than one employee need to buy coverage.

District of Columbia

In D.C., you need insurance if you have more than one employee. Domestic workers who work more than 240 hours a year should also get covered.


Florida’s insurance laws are complex. You’ll need to research Florida’s Worker’s comp classification codes to remain compliant.

Construction businesses must always carry insurance. Non-construction companies need it when they have more than four employees. Agricultural businesses, though, only need it when they have more than six employees.


You need insurance if you have more than three employees. Contractors may also get held liable for subcontractors, too.


If you have more than one employee, then you need coverage. Exceptions include sole proprietors and some domestic workers.


You’ll need insurance if you have more than one employee.


In almost every type of situation, employers should get insurance.


Indiana’s laws are straightforward — all employees must get covered by employers.


Most employers need to get insured. Sole proprietors and LLC’s don’t need to get coverage, but they can if they wish. 


If your employees make over $20,000, then you need to carry insurance. There is an exception, though. Wages paid to sole proprietors and the owners don’t count towards total payroll.


All employees must get worker’s comp insurance.


Regardless of employee status, employers must cover them with insurance.


Businesses must get insurance, but independent contractors are exempt. Subcontractors, though, must get covered.


All employers need to carry insurance. Agricultural office workers, though, don’t need coverage. The same applies to independent contractors who work on farms.


All businesses need to have insurance. Taxi drivers and people who get coverage from federal laws don’t need coverage, though.


Every business must get insurance.


Every business must get insurance, even for employees who are non-US citizens.


You need to get insurance if you have more than five employees.


Businesses with more than five employees need to get insurance. All construction businesses, though, need to have insurance.


Every business needs coverage for every employee.


All businesses must buy insurance. Federal employees and independent contractors are exempt.


All employers must get coverage. Independent contractors and subcontractors must also get covered.

New Hampshire

All businesses must buy insurance, even non-profit organizations.

New Jersey

Every business must get insurance, even out-of-state employers working in the area.

New Mexico

If you have more than three employees, then you need coverage.

New York

New York is strict — insurance is needed in almost every situation.

North Carolina

You need insurance if you have more than three employees.

North Dakota

All businesses must have insure employees.


If you have more than one employee, then you need insurance.


Every business needs insurance.


If you have more than one employee, then you need insurance.


All employers must ensure every employee.

Rhode Island

If you have more than four employees, then you need insurance.

South Carolina

If you have more than four employees, then you must seek coverage. That applies even if employees are minors.

South Dakota

All businesses need to get coverage.


If you have more than five employees, then you must get insurance. If your business is constructed-related, then you must get insurance regardless of the number of employees.


If you’re a construction company on contract with the government, then you need insurance. Otherwise, getting coverage is optional in Texas.


All businesses must cover their employees.


If you have more than one employee, you must get insurance.


If you employ more than two people, then you must get coverage.


All employers must seek coverage. Domestic servants, maintenance workers, farm laborers, and musicians are exempt.

West Virginia

Almost all employers need coverage except:

  • Independent contractors
  • Agricultural employers (less than five employees)
  • Casual employers (less than three workers)
  • Domestic service employers
  • Churches
  • Organized professional sports

Some businesses can self-insure.


If you have more than three employees, you need coverage. Out-of-state employers must comply as well.


The law is simple here — all employers need coverage for all employees.

Your Complete State-By-State Guide to Worker’s Compensation Insurance Laws

It’s crucial to understand your state’s insurance laws if you have a business. A failure to comply will have consequences. On average, an employer pays about $3,000 per worker’s comp violation.

Are you ready to buy worker’s compensation insurance to cover your employees? Do you have more questions about the process? Reach out to us now, and we’ll get started on getting your business in tip-top shape for 2020.

Get In Touch

We are standing by waiting to help you withyour questions – 24/7