Workers' Compensation Insurance

State law requires all businesses with employees to carry workers' compensation insurance. Workers' compensation insurance covers employees injured on the job, even if the employee caused the injury.

A sole proprietor is not required to be covered under workers' compensation insurance. However, in some states, such as Maine, a sole proprietor may be permitted to opt in by purchasing an insurance policy and electing to be covered by the policy. Check your state requirements.

Workers' compensation insurance premiums vary, depending on the level of risk for injury associated with the employee's job. For example, an employee that works with machinery or chemicals is at a higher risk of injury than an office worker, and therefore, workers' compensation insurance premiums will be higher for the employee working in the riskier environment.

Remember Al Franken!

Several years ago, Al Franken was fined $25,000 by the New York State Workers' Compensation Board for failing to carry workers' compensation insurance from 2002 through 2003 while employing people in his namesake company, Al Franken, Inc.

Don't make the same mistake!

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