Why this matters
In most states, workers' comp is mandatory from employee number one. Go without it and a single workplace injury can mean paying medical bills and lost wages out of pocket, with state fines and stop-work orders on top.
What "done" looks like
- A policy in force before your employee's first day
- Class codes on the policy accurately reflect the actual work
- Required notices posted where employees can see them
- You know how to report an injury and file a claim
How to do it
- Check your state's rules, most require coverage from the first employee; a few exempt only the smallest employers, and rules differ for family members and officers.
- Get quotes from an independent agent, your payroll provider, or your state's fund. Premiums are set per $100 of payroll and vary by job classification.
- Verify class codes, an office role priced as a roofing role overcharges you; the reverse gets corrected in a painful audit.
- Consider pay-as-you-go billing through your payroll provider, which prices each payroll run as it happens and avoids year-end audit surprises.
- Set a claim process: injuries reported same-day, claims filed promptly with the carrier.
Common mistakes
- Assuming one part-time employee doesn't count, in most states, it does.
- Treating misclassified workers as exempt: an uninsured "contractor" who is legally an employee is your liability.
- Underreporting payroll to shrink premiums, then getting hit at the annual audit.
Real-world examples
- Texas is the only state where private employers can generally opt out of workers' comp, and non-subscribers give up key legal defenses if an injured employee sues.
- In four states, North Dakota, Ohio, Washington, and Wyoming, employers must buy coverage from the state fund rather than a private insurer.
From a founder's point of view
Workers' comp looks like a pure cost until you price the alternative: one uninsured injury, and the business could face substantial or long-term medical costs. It isn't insurance for the employee so much as insurance for the company's existence.
Rule of thumb
Policy active before the first shift. If someone works for you today and you can't name your carrier, fix that first.
