Who Must Carry Workers Comp Insurance?
Workers' compensation insurance is a product that is regulated by each state. State laws require that most businesses with employees carry a workers' compensation insurance policy, with a few exceptions. State insurance laws generally exempt sole proprietors, business partners and limited liability companies from needing to obtain a policy for workers' compensation coverage. State laws also provide methods for meeting workers' compensation coverage obligations.
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Employee Requirements
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All states have some form of workers' compensation law that has various types of requirements, including the number or employees. States such as Idaho require workers' compensation insurance when a business employs at least one or more full-time, part-time or seasonal employees, unless the business has an exception under state law. Mississippi require workers' compensation insurance for any business that has at least five employees.
Industry
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States laws for workers' compensation may also stipulate specific industries in which a workers' compensation policy is required. Florida requires any industry, except construction, that has four or more full-time or part-time employees to obtain workers' compensation coverage. Any business in the construction industry with at least one employee is required to obtain workers' compensation coverage.
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Farmers
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Some states, including Florida, also have specific stipulations for farmers in their laws for workers' compensation. Florida requires a farmer with five or more regular employees to obtain a workers' compensation policy. Farmers with at least 12 seasonal workers in which employment lasts longer than 30 days are also required to obtain a workers' compensation policy. States can also exempt farmers from workers' compensation requirements, such as Mississippi.
Exceptions
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States that have workers' compensation laws generally have exemptions for certain types of businesses or situations where coverage can be declined. This can include domestic service that is provided within a household, real estate brokers when paid by commission and certain types of volunteers. Exemptions can also be granted for sole proprietors and members of a limited liability company. Some states may also allow a company's officers to be exempt from coverage in certain situations.
Meeting Obligations
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Employers, such as those in Virginia, can satisfy workers' compensation coverage in a variety of ways. One way is to purchase a workers' compensation from an insurer within the state. Another way is to apply with the state Workers' Compensation Commission for approval to be an independent self-insurer. This means that a company will pay for any injury claims themselves.
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