Workers' Compensation Laws by State

Find out if Workers' Compensation is required for your business


Is Workers’ Compensation Insurance required coverage? In most states, you must have Workers' Comp once you hire employees, regardless of your business's industry. Though the laws vary from state to state, if you skip this coverage, it can often cost you more than you may realize.

Let's take a look at state requirements, penalties for noncompliance, and the cost of coverage.

State Law Determines Workers’ Compensation Requirements and Penalties

Every state that requires Workers’ Comp Insurance has a unique approach to addressing noncompliance. Most levy a fine when a business does not have the required coverage, but how much business owners have to pay depends on:

  • Number of employees. 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 businesses with more than five employees, the fine can reach $50,000.
  • The reason for 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 a business is noncompliant. In Illinois, a business owner who knowingly 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 learn more about your state's Workers' Comp requirements and penalties.

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, including:

  • California
  • Massachusetts
  • Michigan
  • Pennsylvania
  • Illinois

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

State Law Influences How Much Workers’ Compensation Insurance Costs

Workers’ Compensation Insurance costs vary depending on several factors, including industry and location. For example, a high-risk industry like construction may pay more for coverage, and the specific professions within that industry have different price points for Workers’ Comp policies.

Each state has its approach to Workers’ Compensation, and that includes determining policy premiums. For example, the National Academy of Social Insurance reports West Virginia has the highest employer cost at $1.55 per $100 of covered payroll as of 2015. The lowest was Texas at just $0.31 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