Work compensation laws in the United States
There is no single work compensation law in America. Workers’ compensation is typically regulated on a state-by-state basis. As a result, work compensation policy requirements can vary widely among states, ranging from no requirement at all to a requirement for almost all businesses in the state.
Here are some variations between states:
- No workers’ comp required: Texas is the only state that does not require employers to carry workers’ compensation coverage.
- Single employee minimum: Many states have a requirement that if a business has even one employee, they must carry workers’ insurance. Most states follow this requirement, with some exceptions for specific types of businesses.
- Multiple employee minimum: Some states have a higher employee minimum threshold, like Mississippi and Missouri. These states require that a business have five or more employees before they are required to buy workers’ comp insurance. Other states might have different minimums, like Virginia (2 employees), North Carolina (3 employees), and Florida (4 employees, for non-construction businesses).
- Payroll minimum: One state, Kansas, requires that businesses that reach a certain payroll threshold must carry workers’ comp insurance. In Kansas, that threshold is $20,000.
Most states also require that businesses purchase workers’ comp insurance through private carriers, but some states have specific state-administered funds. In some states, business owners have the option to purchase a commercial, private insurance plan, or go with the public state fund. Other states only have the state fund as an option, such as Wyoming. In Wyoming, business owners must purchase workers’ comp insurance from the state-administered fund.
Most states also give employers the option to self-insure, which means that the employer pays out its own workers’ comp claims. Being a self-insured business can be riskier than purchasing workers’ comp for employers.
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Work compensation policy and claims
Many states also have work compensation laws on how and when claims are reported. In some states, like California, employees must report their injuries to their employers within 30 days, or they forfeit the right to obtain workers’ compensation benefits. Other states have stringent laws on employer responsibility. In New York and Oklahoma, for instance, employers must report a known employee injury or illness to their insurers within 10 days. There may even be fines for not reporting a claim promptly enough. In Oklahoma, an employer can pay up to $1,000 for failing to report a known workplace incident.
Most states also have work compensation laws on discharging employees who have filed workers’ comp claims. Typically, it is illegal to fire an employee because they filed a workers’ compensation claim.
The Social Security Administration (SSA) also has some regulations regarding who can receive SSA benefits and workers’ comp disability benefits, and how those benefits might combine. If an individual receives benefits from certain source, such as a private pension fund or veteran’s benefits, and Social Security Disability Insurance (SSDI), then their total take-home payout is not affected. However, if an individual receives SSDI benefits and workers’ compensation disability benefits simultaneously, the SSA work compensation law states that the total amount cannot be greater than 80% of the person’s average earnings before that person became disabled.
Why CompSource Mutual
CompSource Mutual offers exclusive benefits and top-of-the-line service to Oklahoma businesses. Over 85 years, we’ve built a familiarity with Oklahoma workers’ compensation laws and standards. Our uniquely qualified team is ready to help you get coverage that makes sense at a fair price.
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What types of injuries are covered by workman's comp?
An injury that occurs while an employee is on the clock, performing work-related tasks can be covered by workman’s comp insurance. Exceptions to coverage could apply if the injury occurred off-duty, such as during the commute to work, or if the employee was under the influence of an illegal substance when the injury occurred. Chronic injuries, such as carpal tunnel, workers’ comp may also apply. It is critical that the employee provide as much documentation as possible so that they can prove that the injury was indeed directly caused by work-related duties. The specific work compensation law regarding non-covered injuries will vary from state to state.
What is the average impairment rating payout?
This depends on the state and the type of injury. In Oklahoma, an impairment rating is given to employees who have a permanent partial disability. Once that employee has reached medical maximum improvement—or, recovered as much as they ever will—they are given a workers’ comp impairment rating to determine what level of permanent impairment was caused by the injury. Depending on the injury, the body part, and its severity, the payout can vary widely. The number could run well into the tens of thousands of dollars.
How can a business calculate workers' comp premiums?
The most direct way to do this is to contact the insurance carrier and request a quote. The premium is based on several factors, so the business owner will need to disclose some information, such as payroll size, how many employees they have, the industry they work in, and whether they have had a workers’ comp policy before. The insurance company will assign the business a workers’ comp modification rate based on its past experience filing workers’ comp claims and use this as a multiplier. In many states, business owners are permitted to carry private workers’ comp insurance, so they can shop around for the best rates.
How can a company improve its workplace safety?
There are many things a company can do to improve its workplace safety. It should first consult the Occupational Safety and Health Administration (OSHA) guidelines for its particular type of business. Business owners can also make sure to provide rigorous employee safety training, particularly for new types of machinery and handling hazardous materials. CompSource Mutual has plenty of safety resources available, visit our safety library page to view safety videos and on-site inspections.
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