Workers’ Compensation Insurance
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State laws for workers’ compensation

Because state laws regulate workers’ comp, you’ll need to research the laws in your state to find the requirements for your business or consult with a licensed Insureon agent.

Each state sets workers’ compensation requirements

Workers’ compensation is regulated on the state level, and each state has its own requirements and penalties. Nearly every state requires employers to carry workers' compensation insurance.

Typically, the number of employees determines when a business needs workers’ compensation insurance. Most often, it’s required as soon as you hire your first employee.

Some states have severe penalties for not carrying workers’ comp insurance

The penalty for not purchasing workers’ comp insurance when it is required varies by state. It can result in a fine, jail time, or both.

States with severe penalties include:

California: In California, it is a criminal offense to not provide workers’ compensation for your employees. It’s punishable by up to a year in jail and a fine of no less than $10,000 – or both. Illegally uninsured employers could face a penalty of up to $100,000.

Illinois: An employer who did not provide workers’ comp when it was required must pay $500 for each day of noncompliance, with a minimum fine of $10,000.

New York: Illegally uninsured employers could be charged with a misdemeanor or a felony. Fines range from $1,000 to $50,000, in addition to a penalty of $2,000 for every 10 days without coverage.

Pennsylvania: In Pennsylvania, intentional noncompliance is a felony of the third degree. It can result in a fine of $15,000 and up to seven years in jail.

In some states, you must purchase workers’ compensation insurance from a state fund

Some states have workers' compensation state funds. Businesses in the following states must purchase workers’ compensation from the state fund, which in this case is called a monopolistic state fund:

Workers’ compensation purchased from a monopolistic state fund does not include employer’s liability insurance. Typically included in workers’ comp, this insurance protects against lawsuits claiming a worker was injured by an employer’s negligence. Businesses can purchase stop gap coverage to close this gap in coverage.

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Updated: February 5, 2024

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