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Workers' Compensation Laws by State

See laws and penalties where you live

3 Things You Need to Know about Workers’ Compensation Laws in Your State

If you work in a relatively "safe" industry, it can be tempting to think Workers’ Compensation Insurance is optional. But that's not the case in most states. Depending on the laws where you live, you may be required to carry Workers' Comp regardless of your business's size or industry. Skip Workers’ Compensation – even out of ignorance – and it can cost you more than you may realize.

Let's take a look at three things you need to know about this coverage as far as state laws are concerned.

1. State Law Determines Workers’ Compensation Requirements – and Fines

Every state that requires Workers’ Comp Insurance handles noncompliance its own way. Most levy a fine when you don’t have the required coverage, but how much you have to pay depends on:

  • The number of employees you have. Sometimes the smaller the business, the smaller the fine. For example, in New York, a noncompliant business with fewer than five employees may face fines of $1,000 to $5,000. For more than five employees, the fine can reach $50,000.
  • The reason for your noncompliance. Penalties can go up if a court decides you purposefully misrepresented the number of employees you have or the jobs they perform. In Pennsylvania, intentional noncompliance is a felony.
  • The number of days you are noncompliant. In Illinois, a business owner who “knowingly and willfully fails to obtain insurance” faces up to a $500 per day of noncompliance.

The takeaway: Noncompliance can cost you thousands of dollars in penalties. Click on your state in the chart above to get the skinny on your state's Workers' Comp requirements and penalties.

2. Workers’ Comp Noncompliance Can Mean Criminal Charges in Some States

Noncompliance can rise to the level of a criminal act, and that usually results in higher fines. But money isn’t the only thing you might lose if you fail to carry Workers’ Compensation Insurance. The punishment can mean jail time in some states, such as…

  • California.  
  • Massachusetts
  • Michigan.
  • Pennsylvania.
  • Illinois

This isn't a definitive list, so be sure to read up on your responsibilities.

3. State Law Influences How Much Workers’ Compensation Insurance Costs

Your industry does impact Workers’ Compensation Insurance premiums. For example, a high-risk industry like construction may pay more for coverage, and the specific jobs within that industry all carry different price tags, too.

But where you live also influences the cost of coverage. Each state has its own way of running Workers’ Compensation, and that includes determining the premium. For example, the National Academy of Social Insurance reports Alaska has the highest employer cost at $2.58 per $100 of covered payroll. The lowest was Massachusetts at just $0.74 per $100 of covered payroll.

You can learn more about Workers' Compensation costs in “How Much Is Workers’ Comp Insurance?

Workers' Compensation Insurance: Further Reading

Workers' Compensation in the Insureon Blog