Where is Workers' Compensation Insurance Required by Law?

Workers’ compensation requirements vary by state. Learn who typically needs coverage—including owners, self-employed, and family S-corps—and how to get a quote.

Every state has laws and penalties related to workers’ compensation insurance. In most states, it’s required as soon as you hire your first employee, while some states don’t require coverage until you reach a set number of employees (often three to five). For example, in Alabama, employers with fewer than five employees generally aren’t required to carry workers’ comp. Texas is the notable exception: most private employers there can choose whether to carry it. Penalties for not carrying workers’ compensation insurance when it is required can range from fines to jail time, or both.

If you want specifics about your state’s workers’ compensation requirements, go directly to your state workers’ compensation board and follow your state’s link from the table below. Laws vary by state: check your state department of insurance or labor, then ask a licensed advisor.

Frequently asked questions

Do I need workers’ comp if I’m self-employed or the only owner with no employees?

It depends on your state. In many states, a sole proprietor, partner, or single-member LLC owner with no employees is not required to carry workers’ compensation, but rules for corporate officers, LLC members, and some industries (construction is a common one) differ by state. Many owners can choose to cover themselves, and clients, general contractors, or platforms may require a workers’ comp certificate even when the law doesn’t. Check your state workers’ compensation agency, then compare workers’ compensation quotes if you need coverage or proof of insurance.

Do I need workers’ comp for an S-corp with only family employees?

Possibly yes. Family members on payroll are usually treated as employees for workers’ compensation, and S-corp officers are often counted as employees too. Some states let corporate officers or certain family members elect out, but those exemptions are state-specific, may require a filing, and are easy to get wrong. Don’t assume “family only” means exempt—confirm with your state workers’ compensation agency or a licensed advisor before you skip coverage.

Is there a state that doesn’t require workers’ comp?

Texas is the main exception: most private employers there can choose not to carry workers’ compensation (they’re called non-subscribers), but they give up certain legal protections, and some contracts—such as many public construction contracts—require coverage. Other states require coverage once you reach a set number of employees; in Alabama, for example, that threshold is five. Check your state’s agency in the table on this page for exact rules.

If understanding workers’ compensation insurance seems overwhelming, you’re not alone. E-COMP can help make workers’ compensation easy and awesome. We’ve taken the guesswork out of the process and we’re passionate about providing workers’ compensation insurance for all size businesses across the country.

When you’re ready, buy workers’ compensation insurance.

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