Workers’ Compensation Insurance in Illinois
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Illinois workers’ compensation law

Illinois law specifies that all businesses with employees must have workers’ compensation insurance, with limited exceptions.

Who needs workers’ comp insurance in Illinois?

Every business in Illinois with employees is required to carry workers’ compensation insurance, including businesses with part-time employees. Illinois law requires employers to purchase a policy through an insurance company or obtain permission to self-insure.

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Do you need workers’ compensation if you are self-employed? 

Business owners, corporate officers, partners, and sole proprietors usually don’t need to have workers’ comp coverage for themselves. The exception is businesses that engage in hazardous work (construction, roofing, etc.). These businesses are required to have workers’ comp coverage for all individuals, regardless of whether they are sole proprietors or owners.

What are the penalties for not having workers’ comp insurance in Illinois?

There are serious penalties for failure to carry workers’ compensation insurance, including:
  • An employer could be fined $500 for each day that it did not carry workers’ compensation insurance, at a minimum of $10,000.
  • If the failure to carry coverage is found to be negligent, it is a misdemeanor.
  • If the failure to carry coverage is found to be knowing and willful, it is a Class 4 felony.
  • A felony conviction for failure to carry workers’ compensation insurance in Illinois is punishable by imprisonment for one to three years and a fine of up to $25,000.
  • A corporate officer could be liable for fines if the company fails to pay.
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How much does workers’ compensation insurance cost in Illinois?

Workers’ compensation insurance costs vary by state and the nature of the occupation. Estimated employer costs for workers' compensation in Illinois are $1.07 per $100 covered in payroll.

However, the specific type of job performed will be the greatest factor for determining costs for workers’ comp coverage. Even within the same company, one job might be more hazardous than another.

Meeting Illinois workers’ compensation requirements

When an employee is injured, he or she is required to inform the employer within 45 days of the event.

The employer is then obligated to inform the workers’ compensation insurance carrier or administrator. If the employee cannot work for more than three days because of the injury, the employer must also:

  • Continue to pay the employee, even if the claim has not yet been made with the insurance company
  • Provide a written explanation to the employee of any additional documentation or information that is required for a claim
  • Provide a written explanation to the employee as to why benefits are being denied, if the claim is denied
  • File the “Employer’s First Report of Injury” with the IWCC

The Illinois Workers’ Compensation Commission (IWCC) facilitates workers’ compensation claims.

Workers’ compensation death benefits

If a person dies as a result of an injury on the job, his or her dependents are entitled to receive workers’ compensation death benefits. Illinois allows for benefits to a deceased worker’s:

  • Spouse
  • Children under 18
  • Children under 25 who are full-time students
  • Children of any age who are physically or mentally incapacitated

If the deceased worker does not have any of these survivors, benefits might go to another family member, including parents, adult children, or grandchildren.

Workers’ compensation death benefits in Illinois are allocated with weekly payments. An eligible dependent could receive up to two-thirds of the deceased person’s average weekly wage, within the minimum and maximum amount established by the state each year. Benefit payments end after $500,000 or 25 years. Workers’ compensation death benefits can also be used for funeral expenses up to $8,000.

Workers’ comp settlements in Illinois

Most workers’ compensation settlements result in a lump-sum payment. Illinois allows payment installments over time in two ways:

  • A wage differential claim, which means the employee would return to work for less pay than before the injury and receive settlement payments equal to his or her previous pay.
  • Permanent and total disability, which would be for someone who is not able to return to work.

Although a settlement usually means that the worker has closed his or her rights to workers’ comp benefits, sometimes medical rights are kept open if the person is likely to require extensive future medical treatment as a result of the injury.

Workers’ compensation statute of limitations

There are two considerations for workers’ compensation statute of limitations in Illinois:

  • The employee must first provide notice of the injury to the employer within 45 days to receive workers’ compensation benefits.
  • The claim for workers’ compensation benefits must be filed with the IWCC within two years of the last payment of compensation from the employer or three years from the date of injury.

If the injury is from ongoing or repetitive trauma, and not a specific incident, then the date of injury is considered to be the date on which a reasonable person would have become aware of the injury and the fact that it was caused by employment.

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