What penalties could I face if I don't carry workers' comp?
You may think you’re not required to have workers’ compensation insurance if you only have a few employees or your employees have low-risk job duties. But most businesses are required by law to have workers’ compensation insurance—and for good reason! In the event one of your valued team members is injured due to a work-related accident, workers’ compensation insurance is designed to help protect the employee and your business from what could be potentially devastating expenses. If you don’t carry workers’ compensation coverage for your employees, you could face penalties including fines, probation, and even jail time.
Of course, if the injury is critical, the required medical care should be ensured for the worker before the employer reports the injury to the insurance provider.
Avoiding workers' comp penalties
As a small business owner, you must follow the workers’ compensation laws in the states where you do business. Each state has its own workers’ compensation laws, so it’s critical to check the laws in your location. Here are a few examples of how business owners can run into trouble:
- Not having workers’ compensation coverage at all
- Not having enough insurance to cover all of their employees
- Allowing their policy to lapse
- Falsely reporting their number of employees, class codes, payroll, or work hours
- Violating other workers’ compensation employer responsibilities like failing to post employee rights, neglecting to report injuries, not providing access to emergency and medical care, etc.
The penalties can be financially devastating—particularly for a small business—and can even result in felony convictions and prison time for business owners.
Workers' compensation penalties—state examples
Here are a few examples of state penalties for various violations of workers’ compensation laws:
|State||Fines||Jail/Prison Time||Criminal Penalties|
|California||Up to $10,000||Misdemeanor; up to one year in jail||$10,000-$100,000|
|Florida||$500 per violation, $1000 minimum; stop-work order||Felony; up to 30 years in prison||Up to $10,000|
|Georgia||$500-$5,000 per violation||Misdemeanor; up to one year in jail||$1,000-$10,000|
|Illinois||Minimum of $10,000, up to $500 per day||Felony; 1-3 years in prison||Up to $25,000|
|New Jersey||$5,000 for the first 10 days and up to $5,000 for each additional 10-day period thereafter||4th degree crime; disorderly persons offense||$5,000 and up|
|New York||$1,000-$50,000||Felony; prison time||$10,000-$50,000|
|Pennsylvania||$500-1000 per violation and suspension of business license||Felony, prison time||$5,000-$15,000 per violation|
*Fines, jail time, and criminal penalties listed above are a summary and are subject to change. Visit each state’s workers’ compensation board site for details.
Look up the workers' compensation laws in your state
Laws vary by state and can change over time. To find out the laws in your state, first, visit the United States Department of Labor workers’ compensation board state map. From there, you can choose your state, and you will then be redirected to the appropriate workers’ compensation board website.
Partner with a workers' compensations insurance company you can trust
Great news! There’s an easy way to learn about the workers’ compensation laws in your state and get in compliance with the law—partner with a workers’ compensation insurance company you can trust.
Learn how to find the best workers’ compensation insurance company for your small business. Then, find out what you need to get a workers’ compensation quote. Once you’ve gathered some basic information, you’ll be ready to either get a quote online, call around, or visit a brick-and-mortar insurance office—depending on the type of insurance company you choose.
Thanks for reading! Please note that this content is intended for educational purposes only. As best practices change regularly, you should refer to your trusted advisor for specific counsel. If you’re a small business owner, learn more about workers’ compensation insurance or check your workers’ compensation rate in 3 minutes.