Worker's Comp Insurance Requirements

Workers' comp insurance is often required by state law once you hire employees, though contracts can require proof of coverage even when state law doesn't. Requirements depend on your employee count, worker types, business structure and the clients or jobsites you work with.

This guide covers legal requirements by state, when contracts require proof, how industry affects timing and how to stay compliant.

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Written by Angelique Palenzuela-Cruz

Updated: February 6, 2026

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Is Worker's Comp Insurance Required By Law?

Workers' comp insurance is typically a legal business insurance requirement once you hire employees, though the specific rules depend on your state and the type of work being performed. Most businesses fall under state workers' compensation laws, which set employee count thresholds and coverage requirements based on worker classification and industry. Federal workers' compensation programs apply in certain employment situations, such as maritime, railroad, federal civilian, and coal mine workers.

Operating without required coverage can block you from jobsites, delay projects, and create legal exposure. The table below shows both legal pathways and where to confirm requirements for your situation.


State law (most businesses)	Employers with employees in most industries and job types	Employee count thresholds, how workers are classified (employee vs. independent contractor), and special rules for business owners, officers, domestic workers, agricultural workers, part-time workers, and seasonal staff	Your state workers' compensation agency or board website
Federal programs (specific situations)	Maritime-related roles in certain contexts, certain railroad workers, federal civilian employees, coal mine workers, and other federally covered employment	Job type and federal jurisdiction	The relevant federal program or agency overseeing your work type

Worker's Comp insurance Requirements By State

Workers' comp requirements vary by state based on employee count, worker type, and business structure. This table shows your state's baseline threshold and common exemptions so you can quickly identify your starting point.

Keep in mind these are baselines only. How workers are classified (employee vs. independent contractor), whether owners or officers elect coverage, and industry rules for domestic, agricultural and seasonal workers can all change what applies to you. Confirm with your state workers' compensation agency or board to verify requirements for your situation.

State	Minimum Employee Threshold	Exemptions
Alabama	5+ employees	Domestic employees, farm laborers, casual employees
Alaska	1+ employees	Sole proprietors, part-time babysitters, harvest helpers
Arizona	Any employees	Independent contractors not typically involved in usual business
Arkansas	3+ employees	None specified (employers with fewer than 3 may still need coverage)
California	Any employees	Specific contractors (roofing, tree service, HVAC) required even without employees
Colorado	1+ employees	None specified
Connecticut	1+ employees	Household workers working less than 25 hours per week, sole proprietors, LLC members
Delaware	1+ employees	Farm workers
Florida	4+ employees (1+ for construction)	None specified
Georgia	3+ employees	None specified
Hawaii	1+ employees	Some exceptions (not specified)
Idaho	1+ employees	None specified
Illinois	1+ employees	None specified
Indiana	1+ employees	Railroad workers, real estate employees, independent contractors
Iowa	1+ employees	LLC members, domestic employees earning less than $1,500, agricultural exchange workers
Kansas	Annual payroll above $20	Real estate agents working as independent agents, certain agricultural workers
Kentucky	1+ employees	Agricultural employees, some domestic workers in private homes
Louisiana	Any employees	Workers at private residences, unincorporated farms, certain musicians/performers, unpaid non-profit officers
Maine	1+ employees	Domestic workers in private homes, certain agricultural workers
Maryland	1+ employees	Agricultural businesses with less than 3 employees, businesses with annual income less than $15,000
Massachusetts	Any employees	Domestic employees working less than 16 hours per week
Michigan	1+ employees working 35+ hours OR 3+ employees regularly	None specified
Minnesota	1+ employees	Sole proprietors, partners, corporate officers
Mississippi	5+ employees	Domestic workers, farm laborers, non-profit/religious/cultural organization employees
Missouri	5+ employees (1+ for construction)	None specified
Montana	Any employees	Household/domestic workers, amateur athletic officials, church ministers
Nebraska	1+ employees	Federal employees, railroad employees, domestic servants
Nevada	1+ employees	None specified
New Hampshire	Any employees	None specified
New Jersey	1+ employees	None specified
New Mexico	3+ employees (1+ for construction)	None specified
New York	Any employees	None specified
North Carolina	3+ employees	None specified
North Dakota	Any employees	None specified (monopolistic state fund)
Ohio	Any employees	None specified (monopolistic state fund)
Oklahoma	Any employees	Some exceptions (not specified)
Oregon	Any employees	None specified
Pennsylvania	Any employees	None specified
Rhode Island	1+ employees	Sole proprietors, some domestic and agricultural workers
South Carolina	4+ employees	None specified
South Dakota	Optional (not required by law)	All employers may opt out, but face unlimited civil liability if an uninsured employee is injured
Tennessee	5+ employees	None specified (construction and coal mining require coverage regardless of employee count)
Texas	Not generally required	Government contractors must have coverage
Utah	Any employees	Few exceptions (not specified)
Vermont	1+ employees	Sole proprietors, casual workers, agricultural workers with employer payroll $10,000 or less
Virginia	3+ employees	None specified
Washington	Any employees	None specified (monopolistic state fund)
West Virginia	1+ employees	Independent contractors, agricultural employers with less than 5 employees, domestic services employers, churches
Wisconsin	3+ employees	Different requirements for farmers and businesses without regular employees
Wyoming	Any employees	Federal government employees, private duty nurses for private parties, independent contractors (monopolistic state fund)

STATE SYSTEMS THAT WORK DIFFERENTLY

Four states only let you buy workers' comp through state funds: North Dakota, Ohio, Washington, and Wyoming. If you're in one of these states, you can't shop around with private insurance carriers. You'll need to go directly to your state fund for coverage and expect the application process and pricing structure will look different from the standard private market.

When Is Worker's Comp Insurance Required By Contracts?

As an independent contractor, you aren't covered by your client's workers' comp policy. If you get injured on a jobsite without your own coverage, your client risks audit penalties when their insurer treats payments to you as employee wages. This is why contracts often require you to carry workers' comp before you can start work, even when your state doesn't legally require it for sole proprietors without employees.

Use the table below to identify when contracts will require you to provide proof of coverage based on your client types and work arrangements.


Subcontracting on construction sites or commercial projects	General contractors, project owners, construction managers	COI with active coverage, correct certificate holder, matching coverage dates, employers liability limits (often $1M minimum)
Access to commercial properties or facilities	Property management companies, building owners, facility managers	COI before site access, certificate holder naming property owner, active coverage for agreement duration
Vendor registration and procurement systems	Corporate procurement departments, healthcare facilities, educational institutions, government agencies	Proof of coverage during registration, verification before purchase orders, annual renewal tracking
Client contracts in professional services	Law firms, accounting firms, consulting clients, agencies, corporate clients	COI attached to service agreements, coverage verification before project starts, renewal tracking for extended engagements

How To Ensure You Meet Worker's Comp Insurance Requirements

Complying with workers' comp insurance requirements means keeping your coverage aligned with your operations as your workforce grows and your business relationships evolve. Follow these steps to avoid rejected certificates and coverage gaps:

1
Confirm the requirement
Check whether your state legally requires coverage based on your current employee count, then review your contracts to see if clients, property owners, or general contractors require proof of coverage. Pay attention to when proof is due because some contracts require it before work starts, others during onboarding and some at annual renewal.
2
Keep workforce information accurate
Track how each worker is classified and update records when your workforce changes:
- Employee vs. independent contractor status for each worker
- Payroll updates when roles change or new hires start
- Which states your employees work in if you operate across multiple locations
3
Align coverage setup to operations
Make sure your policy matches what you do and where you do it:
- Coverage includes the work you perform and where it happens
- Start dates align with when employees begin work
- Renewal dates don't create gaps between policy terms
4
Run a proof-of-coverage workflow
Request certificates of insurance from your insurer when clients or contracts require them, then send certificates to the right parties. Store proof documents where you can access them quickly and track renewal dates to prevent expired certificates from blocking work.
5
Control subcontractor compliance (if applicable)
If you hire subs, require proof of workers' comp before they start work:
- Collect certificates of insurance during sub onboarding
- Verify coverage is active and includes all workers
- Track expiration dates throughout the project
6
Review on change and prepare for audits
Treat workforce changes as triggers to review your coverage. Keep payroll records, worker classifications, and coverage documents organized for audits:
- Hiring new employees, changing job roles, or expanding to new states
- Records showing when coverage was active and who was covered
- Documentation that supports worker classifications

Worker's Comp Insurance Requirements: Bottom Line

Most states require workers' comp insurance once you hire employees, though the threshold varies (some states require it at one employee, others at three or five). Contracts add another layer since they can require coverage even earlier. If you work at client sites, hire subcontractors or go through vendor onboarding, you may need coverage before your state legally requires it.

Business insurance requirements change as your business evolves: hiring employees, taking on new contracts, expanding to new states, or changing how you classify workers all trigger the need to review what's required. Treat these milestones as checkpoints instead of assuming your initial assessment still applies.

Worker's Comp Insurance Requirements: Next Steps

Understanding the requirement landscape is the first step to getting the right coverage. Use these resources for an in-depth understanding of how workers' comp insurance works and whether you need it:

Do I need workers' comp insurance? Determine whether coverage applies to your specific business based on your workforce, contracts, and operations.
Are workers' comp and employers liability insurance the same thing? Understand the difference between these coverages and why they often appear together on certificates of insurance.
What is pay-as-you-go workers' comp? Learn how this payment option works and whether it makes sense for businesses with fluctuating payroll.

If you’re ready to compare costs and providers:

If you want to explore other types of business insurance:

About Angelique Palenzuela-Cruz

Angelique Palenzuela-Cruz is a Content Writer at MoneyGeek specializing in business insurance. She focuses on general liability, workers' compensation and professional liability coverage, helping small business owners cut through policy jargon and understand what they're actually buying.

Angelique has spent over five years reporting on personal finance, with deep experience in both insurance and lending markets. Her psychology background also gives her a unique understanding of how people actually process difficult financial decisions, allowing her to meet readers where they are, simplify complex concepts and build decision making frameworks that give them confidence. Whether you're learning about policies, comparing providers or trying to figure out requirements, Angelique does the legwork, digging into regulations, analyzing policy language and testing her explanations against agent-level standards so you get straight answers without fluff.

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