Which employers must carry workers' comp?

Requirements vary by state but generally apply to businesses with employees. Some states exempt very small employers.

Workers' compensation insurance is a mandate designed to ensure that employees who are injured or become ill as a result of their job are provided with adequate medical and wage replacement benefits. However, whether or not a business must carry this insurance depends largely on the specific laws of the state in which it operates. Generally, most states require any business with one or more employees to have workers' comp insurance. Some states may have exemptions for very small businesses, typically those with only a few employees, or for employers in certain industries. It's important for business owners to understand their state's specific requirements, as failing to comply can result in penalties.

Imagine you own a small bakery with three employees. You're located in a state where any employer with two or more employees must carry workers' comp insurance. In this case, you would be required to purchase a policy to cover your team in case of a workplace accident or illness. However, if you were in a state that exempts businesses with fewer than five employees, you might not be required to buy workers' comp insurance. It's crucial to check local laws to determine your obligations.

As a business owner, it's essential to first research the workers' compensation requirements specific to your state. Check with your state's labor department or a local insurance agent to understand the specifics. Even if you're not legally required to carry workers' comp, consider the potential risks and benefits of having it. Providing this coverage can protect your business financially and demonstrate to employees that their safety and well-being are a top priority. Regularly review your insurance needs as your business grows or changes, and keep well-documented records of any workplace injuries or claims.