Who Must Carry Worker’s Compensation Insurance?

Workers’ compensation is a form of insurance that is required by most businesses to protect their employees in case they become ill or injured while at work. This type of insurance covers the cost of medical bills, provides lost wages while out of work, and even pays for rehabilitation so that the employee can return to their job quicker.

The government has their own workers’ compensation program for their employees. So what kinds of companies are required to carry workers’ compensation insurance? It is required across the country but each state can enforce its own stipulations. Here are some specifics that differ from state to state.

Which Businesses are exempt from Carrying Workers’ Compensation Insurance?

The only businesses that are exempt from carrying workers’ compensation insurance include limited liability companies, sole proprietors, and business partners. A limited liability company combines elements of a partnership and sole proprietor business.

Number of Employees

One of the areas that states across the country cannot agree on is how many employees must a business have to be required to carry workers’ comp? Mississippi businesses have to have a minimum of five employees while Idaho makes a business with just one employee carry workers’ compensation insurance. Florida has a minimum of four employees but a construction business requires the insurance with only one employee. The construction business lends itself to more accident-prone situations than most businesses so even one employee needs to be covered.

Who Must Carry Worker’s Compensation Insurance?


Farmers are required to carry this type of insurance if they have a minimum of five employees who work on a regular basis. Because some farm work is seasonal, farmers who have 12 workers who work more than 30 days also must carry workers’ comp. Mississippi is one state that does not require farmers to carry workers’ comp no matter how many employees they have, seasonal or not.

Special Exemptions

Real estate agents who work on commission are not covered by workers’ compensation as well as volunteers, and the services of domestic workers who perform their duties in private homes.Reporting a business that is not carrying the required workers’ compensation

If you find that you are working for a business that does not have workers’ compensation coverage you should notify the Division of Labor Standards Enforcement. Locate the closest office to you and let them handle it from there.

If, however, you are based in Phoenix area, you should look at for information on the website listed below: Phoenix Workers Compensation

Even if you are not required by law to have workers’ compensation coverage, you should carry it in order to save yourself from being held personally responsible in case of injury or illness caused at work. Without workers’ compensation, an employee who gets hurt at work could sue your business or you personally in a fairly large lawsuit. All the employee would need is a good lawyer who could prove that you were negligent and this was the reason for the accident. You might find yourself paying double or even triple the amount that would normally be covered by your insurance. It boils down to a pay me now or pay me later situation. Do the right thing for your employees, even if it is not mandatory.

Share this article: