Workers Comp Insurance Requirements by State 2025 State for Small Businesses

In 2025, small business owners can’t afford to ignore Workers Comp Insurance Requirements by state. States vary in their requirements, and failure to comply, whether intentional or inadvertent, can result in significant consequences. If you’re running a team, whether it’s two employees or twenty, you need to know whether your state requires workers’ comp and what counts as “covered.” In this article, we’ll walk you through how it works and what you need to pay attention to regarding workers comp insurance requirements by state.

What Are Workers Comp Insurance Requirements by State?

Let’s break it down: Workers’ comp is a safety net. If an employee gets injured or falls ill because of something that happened on the job, this insurance steps in. It helps cover:

Medical bills
Lost wages during recovery
Rehabilitation costs

But there’s more to it. Additionally, workers’ comp protects your business from potential legal issues, such as lawsuits related to those injuries. And while it’s legally required in most states, the details vary. That’s why this guide focuses on helping you understand state-specific laws and workers comp insurance requirements by state.

When Do Workers Comp Insurance Requirements Apply by State?

Workers’ comp rules vary significantly by state—there’s no one-size-fits-all.

For instance, California and New York require workers’ compensation coverage as soon as you hire even one part-time employee. This includes family members, seasonal workers, and temporary staff.

Florida requires it once you hire four or more employees—unless you’re in construction. In that case, just one employee makes coverage mandatory.

In Georgia, the rule kicks in once you have three or more workers, including part-time or temporary staff.

Because of this variation, it’s essential to understand the Workers Comp Insurance Requirements by State where your business operates. Staying compliant helps avoid fines, lawsuits, and operational disruptions.

Workers Comp Insurance Requirements by State: Full Breakdown

California

If you have no exceptions.
It includes part-time, seasonal, and even temporary help.
Non-compliance could lead to fines and even criminal penalties.

Texas

Here’s the outlier: Texas doesn’t require workers’ comp.
However, neglecting it could leave you vulnerable to lawsuits if an injury occurs.
Many larger companies in Texas still carry coverage by choice.

Florida

For most businesses, four or more employees means coverage is needed.
For construction: You need it if you have just one employee.
Owners and officers may apply for exemption but must file paperwork.

New York

Even if you hire just one part-time person, coverage is mandatory.
Applies to family, contractors, and volunteers.
State enforcement is strict. Penalties can include daily fines.

Illinois

If you have one or more employees, including part-time ones, you must comply.
Corporate officers count, unless officially excluded.
What is the penalty for non-compliance? $500 per day, up to $10,000 total.

Georgia

If you have one or more employees, including part-time ones, you must comply.
Coverage also extends to part-timers and temporary employees.
What is the penaltyrage? Be ready for civil lawsuits or state penalties.

Ohio

Workers’ comp is state-run only; no private insurance is allowed.
You must pay into the Ohio Bureau of Workers’ Compensation.
Audits and penalties apply if you’re uninsured.

Pennsylvania

Virtually all businesses must have insurance.
Coverage is required even if you hire someone for seasonal work.
Non-compliance can bring both fines and criminal charges.

Arizona

One employee is enough to trigger the need for coverage.
You can opt for private insurance or self-insurance that has received state approval.
Failure to insure could result in stop-work orders.

North Carolina

Virtually all businesses must have insurance. must carry workers’ comp.
Construction companies often require it of just one employee.

How to Get Workers Comp Insurance in Your State

Buying workers’ comp isn’t complicated, but it depends on your state. Your options usually include

Private Insurance Providers: Most common route.
State Funds: Like those in California and Ohio.
Assigned Risk Pools: For businesses considered too risky for standard coverage.

Always check that the provider is licensed and approved for your state. This ensures your policy complies with the Workers Comp Insurance Requirements by State.

Exemptions to Workers Comp Insurance Requirements by State

In some cases, you might not need workers’ comp. Examples include:

Sole proprietors with no employees
Business partners or LLC members (in some states)
Corporate officers who opt out properly
Independent contractors, if classified correctly,

Just remember: misclassifying employees as contractors can land you in trouble. When in doubt, consult your state labor department about Workers Comp Insurance Requirements by state.

Penalties for Not Following Workers Comp Insurance Requirements by State

Big mistake. If you’re caught without required coverage, here’s what might happen:

Heavy fines (some states charge per day you’re uninsured.)
Lawsuits from injured workers
License suspension or forced business closure
Even criminal charges in severe cases

FAQs About Workers Comp Insurance Requirements by State

Is workers’ comp required everywhere?

No. It’s required in every state except Texas. But skipping it in Texas still puts you at risk.

Are part-time or seasonal workers counted?

Yes, in most states. Even if someone works just 10 hours a week, you may still need to cover them.

Can I avoid it if I’m the only person in the business?

Usually yes—sole proprietors without employees are often exempt. But check your state’s law.

What if I have remote or out-of-state workers?

You’ll need coverage in each state where employees are physically located. It’s essential to understand Workers Comp Insurance Requirements by State if your team is spread out.

How much does it cost?

It depends. Risky industries (like roofing) pay more. Office jobs cost less. Rates are based on payroll and job type.

Final Note on Workers Comp Insurance Requirements by State

Workers comp insurance requirements by state may not be exciting, but they’re essential. If you’re a small business owner, staying compliant protects your people—and your business—from financial disaster. When in doubt, check with your local insurance agent or state labor department. Ensuring compliance is preferable to facing legal action.

For a deeper dive, check the U.S. Department of Labor Workers’ Comp Resource.