Workers’ comp requirements by state: who must carry it

What the table below measures

Each row summarizes one state’s rule for who must insure employees, where the policy is bought and which organization publishes loss costs or rates. The wording comes from the state page for that jurisdiction, which links the statute or agency page behind it. Exemptions, penalties and sources for any one state are on its hub, for example Texas or Florida. The table gives the rule as written, not the price: for cost, see workers’ comp cost by state.

From each state’s statute and workers’ compensation agency; the state hub lists exemptions, penalties and sources.

Thresholds: from the first employee to five

The common rule is coverage from the first employee, including part-time staff. The exceptions in the table cluster into four kinds:

• Higher headcounts. Alabama and Mississippi, Missouri and Tennessee set the threshold at five employees; Florida and South Carolina at four; Arkansas, Georgia, Michigan, New Mexico, North Carolina and Virginia at three. Who counts differs: Alabama counts part-time staff, corporate officers and LLC members, Missouri counts relatives within the third degree, and Tennessee counts family members and minors.
• Payroll tests. Kansas applies a payroll threshold of more than $20,000 a year for non-farm employers; Illinois requires coverage from the first employee in hazardous trades and, for others, once payroll passes $1,000.
• Industry lists. Wyoming requires coverage only in industries listed in W.S. 27-14-108; see below.
• Voluntary below the line. Mississippi says employers under five regular workers may cover voluntarily, so a policy there is a choice, not a violation of law.

A threshold is a legal trigger, not a measure of risk. A contract, a license, or a general contractor above you can require a certificate even where the state would not (New Hampshire notes a general contractor may require owner coverage by contract).

Construction is where thresholds disappear

Many states with a headcount threshold remove it for building work. Florida requires coverage from one construction employee instead of four, and counts a subcontractor’s employees as the contractor’s if the sub has no coverage⁠¹². Missouri and Tennessee also require coverage from the first employee in construction, and New Mexico does so for work that needs a Construction Industries Licensing Act license. Arkansas applies a one-employee rule to any contractor that subcontracts part of a contract. Alabama’s fewer-than-five exemption does not cover new single-family detached homes. California requires coverage with one employee anyway, but five licensed classes (C-8 concrete, C-20 HVAC, C-22 asbestos abatement, C-39 roofing and C-61/D-49 tree service) must carry it even with none; see the California hub.

The reason to read this before hiring a subcontractor: in several states the contractor, not the sub, carries the uninsured risk. See general contractors and roofers for how that flows into premium.

Owners and officers: usually optional, always paperwork

Sole proprietors and partners are generally not “employees,” so they are outside the mandate unless they buy coverage for themselves. Corporate officers are where states differ:

• Opt-out by filing. Florida officers with 10% or more ownership may file an exemption (valid 2 years); in construction no more than three officers can be exempt and the fee is $50⁠¹². Georgia lets up to five officers or LLC members waive on Form WC-10, though they still count toward the three-employee threshold. New Hampshire excludes up to three executive officers.
• Ownership floors. Alaska, Colorado and Louisiana set 10%; Minnesota sets 25% for closely held corporations (with a payroll-hours cap); Massachusetts sets 25% of stock.
• Officers included unless they waive. Rhode Island includes officers unless they file a DWC-11 waiver.
• South Dakota. An executive officer can reject coverage by written notice served on the corporation, including more than 30 days before an injury⁠⁵.
• State fund states. North Dakota treats officers and owners as employers who may buy elective coverage⁠⁶; Wyoming treats sole proprietors, partners and officers as outside the definition unless they elect coverage.

Exempting yourself can cut payroll in the premium base, but an exempt owner has no comp benefits if injured, and a customer’s contract may still demand coverage. Where an owner does construction work, some states refuse the exemption: Oregon treats multi-member LLC members as subject workers while doing construction work.

Texas: elective for private employers

Texas Labor Code ch. 406 says a private employer may elect coverage, except public employers⁠¹. A private employer that skips coverage is a nonsubscriber. It must file a notice of no coverage with the Texas Division of Workers’ Compensation between February 1 and April 30 each year, after hiring its first employee and after ending a policy, post notice at work and give new hires written notice⁠². Employers with five or more employees must report injuries with more than one day of lost time⁠².

The price of opting out is litigation exposure: nonsubscribers lose the defenses of contributory negligence, assumed risk and fellow-employee negligence in an injured employee’s suit⁠¹. Public contracts also limit the choice: a contractor on a governmental building or construction contract must certify in writing that it covers every employee on the project, and subcontractors give the same certificate to the general contractor⁠¹. Our Texas page did not confirm a dollar penalty for missing a notice; see the Texas hub.

South Dakota: no mandate, but a consequence

The South Dakota Department of Labor & Regulation states there is no law requiring any employer to carry workers’ compensation insurance⁠³. The statute adds the consequence: an employer under the Act that does not secure payment by insurance or approved self-insurance is deemed to have elected not to operate under the comp title⁠⁴. The department says such an employer may be sued in civil court by an injured worker⁠³. We found no statutory fine. In practice this is closer to Texas than to a mandate state, but South Dakota has no nonsubscriber filing like the Texas notice that we could confirm. See the South Dakota hub.

Monopolistic states and what a state fund does not cover

Ohio and Washington require employers to insure with the state fund or qualify as self-insured; private insurers cannot sell the coverage in either, and the same holds in North Dakota and Wyoming. Details that change what you carry:

• Wyoming requires coverage only in the industries listed in W.S. 27-14-108(a), regardless of headcount; they include construction, mining, manufacturing, health care and trucking. Employers outside the list may elect coverage but then must cover all employees⁠¹¹.
• North Dakota requires one regularly employed worker and an application before the first employee works; the state fund says its account excludes general liability, will not waive subrogation and does not list additional insureds⁠⁶. Its All States Coverage covers temporary, incidental out-of-state work in all states except Ohio, Washington and Wyoming (see the North Dakota hub).
• Washington offers out-of-state supplemental reporting when workers are elsewhere more than 30 days a calendar year; it requires a certificate from an insurer licensed in the other state⁠⁸.

Employer’s liability is the gap to check: a state fund’s policy answers the injury claim, but not necessarily a suit that the exclusive-remedy rule does not bar. Ask the fund what its policy covers before assuming you need nothing more; private “stop-gap” employer’s liability exists for this purpose.

Penalties for going without coverage

Penalties fall into three groups, none of which is predictable from the headcount rule:

• Stop-work orders and civil fines. Florida issues a stop-work order and a penalty of twice the premium that would have been paid, or $1,000 if greater⁠¹². California serves a stop order and assesses $1,500 per employee.
• Criminal exposure. Alaska: a $10,000 fine and up to one year in prison. North Dakota: for willful failure, $5,000 plus three times the premium that should have been paid, a class A misdemeanor (class C felony if premium due exceeds $1,000)⁠⁷. Washington: a gross misdemeanor, and continuing after L&I revokes the certificate is a class C felony⁠⁹.
• Loss of the exclusive-remedy shield. In Ohio, a noncomplying employer is liable to injured employees for damages and cannot use the fellow-servant, assumption-of-risk or contributory-negligence defenses⁠¹⁰. Wyoming adds liability to the state for awards paid, interest of 1% a month on unpaid premium and a possible lien⁠¹¹.

Some states have no confirmed fine at all. Arkansas, for example, is listed on our page as unconfirmed. An uninsured employer is also exposed to the injured worker’s full wage and medical claim, which can far exceed back premium.

How to prove coverage

• Certificate or policy information page. Out-of-state employers working in Florida or Tennessee need the state named in item 3A of the policy information page; see the Florida and Tennessee hubs.
• Licensing. Delaware will not issue a contractor’s business license until you file a certificate of comp insurance or approved self-insurance; California’s contractor board will not keep a license active without proof of comp or a filed exemption, and an exemption is void once you hire.
• Public contracts. Texas public building contracts require a written certificate from every contractor and subcontractor⁠¹.
• Lapses. Delaware insurers notify the state within 14 days of a lapse and you then have 14 days to show proof; Indiana’s Board can request proof and a response is due by the tenth day. North Carolina requires a posted notice and the notice must come down when coverage lapses.
• State funds. North Dakota issues no written policy, since its provisions are statute and rule⁠⁶; ask for the account certificate your customer will accept. Washington employers using out-of-state supplemental reporting must give L&I a certificate from an insurer licensed in the other state⁠⁸.

For how the premium itself is set once you have a policy, read how premiums are calculated and experience modification rate; the rates pages hold the full Ohio, Washington and Wyoming schedules.

Penalty amounts and thresholds change by statute. Each state hub gives the rule as checked on 2026-10-13 with its source; confirm with the state agency before acting on it.

Sources

1. 1
   Texas Legislature, Texas Labor Code ch. 406 (coverage, notices, nonsubscriber suits, public contracts) Checked 13 Oct 2026 · Back to text ↑
2. 2
   Texas Department of Insurance, Division of Workers’ Compensation, Non-subscriber information and notices Checked 13 Oct 2026 · Back to text ↑
3. 3
   South Dakota Department of Labor & Regulation, Workers’ Compensation Checked 13 Oct 2026 · Back to text ↑
4. 4
   South Dakota Legislature, SDCL 62-5-7 (failure to secure payment as election not to operate under title) Checked 13 Oct 2026 · Back to text ↑
5. 5
   South Dakota Legislature, SDCL 62-3-5.1 (notice by corporate officer rejecting coverage) Checked 13 Oct 2026 · Back to text ↑
6. 6
   North Dakota Workforce Safety & Insurance, Coverage requirements Checked 13 Oct 2026 · Back to text ↑
7. 7
   North Dakota Legislative Council, North Dakota Century Code ch. 65-04, Premiums Checked 13 Oct 2026 · Back to text ↑
8. 8
   Washington State Department of Labor & Industries, Out-of-state employers and out-of-state workers Checked 13 Oct 2026 · Back to text ↑
9. 9
   Washington State Legislature, RCW 51.48.103 (operating without a certificate of coverage) Checked 13 Oct 2026 · Back to text ↑
10. 10
    Ohio Legislative Service Commission, Ohio Revised Code s. 4123.77 (employers failing to comply) Checked 13 Oct 2026 · Back to text ↑
11. 11
    Wyoming Legislature, Wyoming Statutes Title 27 (W.S. 27-14-102, -108, -201, -203) Checked 13 Oct 2026 · Back to text ↑
12. 12
    Florida Department of Financial Services, Division of Workers’ Compensation, Workers’ compensation coverage requirements Checked 13 Oct 2026 · Back to text ↑

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