In the United States, all states except Texas require employers to purchase workers' compensation insurance. This type of insurance covers the expenses of employees who are injured on the job. Generally, companies with four or more full-time or part-time employees must have workers' compensation insurance. Employers from other states may need to purchase coverage if they enter into an employment contract in California or New Jersey, or if they do any work in New Jersey.
Additionally, farmers who employ six or more workers on the same day for 20 days during the calendar year must take out insurance no later than ten days after the twentieth day of employment. Certain employers are exempt from this requirement, including independent contractors, agricultural employers with fewer than five employees, and casual employers with fewer than three workers. All employers in the construction or coal mining sector (regardless of the number of employees, including subcontractors) and all employers with five or more employees must have coverage. Other exemptions include domestic service employers, employees with federal coverage, employers who are religious, and employers who play organized professional sports (but coverage must be provided to employees who help run the business but do not participate in sports activities).
Employers covered by federal liability laws are exempt, as are family farm operations, with some restrictions. It is important to note that there are exceptions to the requirement of three or more employees, so employers with fewer than three should check with authorities before assuming that they are not subject to workers' compensation laws.
