Unless a business is located in the state of Texas, the business (or place of employment) may be required to provide workers compensation insurance for injuries and accidents employees may incur while on the job. Texas is the only state in the union that does not require employers to provide such insurance.
General Coverage
Workers' compensation insurance covers an employee’s medical expenses and lost wages. It may also provide benefits for dependents of workers who are killed on the job due to work-related accidents or illnesses.
Some Limitations
Every state has its own set of workers' compensation laws. Some states have statutes protecting employers by limiting the amount an injured employee may recover from an employer. Some state laws protect fellow employees by eliminating any liability on the part of co-workers for most accidents.
Minimums Required
Every state also has its own statutes mandating the amount of worker's compensation insurance an employer must maintain. Each state also has statutes determining the percentage of the employee’s salary the employer must pay if the employee misses work due to a work-related injury or illness.
Self-Insurance
Some states allow employers who meet minimum payroll levels or a sufficient number of employees to forego maintaining workers' compensation insurance and be self-insured, meaning they pay any claims out of pocket.
Exemptions
Some states also allow smaller employers, typically with 5 or fewer employees, to be exempt from the requirement of maintaining worker's compensation insurance.
In addition, not all states require all employees to be covered by workers' compensation insurance. Exempt employees may include business owners, independent contractors, domestic household workers, agricultural workers, maritime or railroad employees, and unpaid volunteers.