Understanding Workers' Comp Laws By State (2026)

How Workers' Compensation Programs Work

In every state except for Texas, most employers are required to carry workers’ compensation insurance. Here’s how the system works:

• Employers pay insurance premiums
• When a worker is injured, they file a claim against the policy
• If approved, their medical care is covered, and they receive wage replacement benefits

Wage replacement benefits are usually two-thirds of the employee’s average weekly wage before the injury.

Types of Workers' Compensation Benefits Available

Although there are slightly different workers' comp laws by state, most states offer similar benefits, like these:

• Partial wage replacement benefits
• Long-term compensation for injuries that result in disability
• Vocational rehabilitation
• Death benefits

Although partial wage replacement is usually two-thirds of your weekly wage, some states set minimum and/or maximum benefit amounts. For example, in 2025 in New York, the minimum benefit is $325 per week. The maximum is $1,222.42.

Who Is Covered Under Workers' Comp Laws?

In most states, the vast majority of employers must carry workers’ compensation insurance. However, very small companies and those that work with independent contractors may qualify for a workers’ comp exemption. Many businesses are also exempt from covering executives.

State-by-State Workers' Compensation Laws

Whether you’re a business owner getting ready to purchase insurance or someone who’s been hurt at work, it’s important to understand workers' comp laws by state.

The chart below offers an overview, but keep in mind that each state has exceptions and special circumstances.

State-Specific Penalties for Non-Compliance

If you’ve spent any time reading about workers’ compensation insurance requirements by state, you may already know that some states impose very harsh penalties for non-compliance. These are some of them:

California

Failing to carry workers’ comp insurance could lead to a year in jail and a $10,000 to $100,000 fine.

Pennsylvania

If you deliberately fail to carry workers’ comp insurance, you could spend seven years in prison and owe a $15,000 fine.

Alaska

If you don’t have workers’ comp insurance, you could be charged $1,000 per employee per day. You may also be sentenced to jail time, and the state may order you to close your business until you’re compliant.

Special State Fund Requirements and Monopolistic States

In most states, employers may purchase workers’ compensation insurance from a state insurance fund or a private insurance company.

Many states have a “competitive state fund,” meaning that the state-run workers’ comp insurance competes with private insurers. These are the states with competitive state funds:

• Arizona
• California
• Colorado
• Hawaii
• Idaho
• Kentucky
• Louisiana
• Maine
• Maryland
• Minnesota
• Missouri
• Montana
• New Mexico
• New York
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• Texas
• Utah

Four states (North Dakota, Ohio, Washington and Wyoming) are monopolistic states. This means that businesses may only purchase workers’ compensation insurance from the state.

Get Legal Help With Your Workers' Comp Claim

If you’ve been injured at work, you shouldn’t have to handle the fallout alone. If you’re having trouble with your workers’ comp claim or just need some guidance through the process, you should consult a workers’ compensation lawyer as soon as you can.

Not sure how to find one? ConsumerShield can help. We connect people across the country with nearby legal professionals. Fill out our contact form below to get started today!