Running a business comes with many responsibilities. One of the most important is making sure your team has the support they need if someone gets hurt on the job. This is why many employers ask the question: do I need workers’ compensation insurance?
The answer depends on your state laws, the type of work you do, and how many employees you have. In many cases, workers’ compensation insurance is required by law. Yet even when it isn’t, coverage can offer valuable protection for your business.
Who Is Legally Required to Carry Workers’ Compensation Insurance?
Workers’ compensation requirements vary by state, but most states require coverage once a business reaches a certain number of employees. Some states set the threshold at four employees. Others require coverage as soon as there is one employee on payroll.
In Florida, for example:
Construction businesses must carry workers’ compensation for every worker, regardless of employee count or length of employment
Agricultural businesses must carry coverage if they have six or more regular employees or 12 seasonal workers
All other businesses must carry workers’ compensation when they have four or more employees
Businesses that meet these thresholds are not allowed to opt out. Failure to carry coverage can result in penalties such as:
Stop work orders
Significant fines
Payment of unpaid premiums
Possible legal action
It is important to review requirements regularly, especially if your business has grown or changed industries.
How Seasonal Workers Affect Workers’ Compensation Requirements
Seasonal, part-time, and temporary workers often count toward your employee total. They may also qualify for workers’ compensation benefits if they are injured while working.
This is especially important for businesses that increase staffing during busy periods, such as:
Retail stores
Landscaping and lawn care businesses
Hospitality and event venues
Farms and agricultural operations
Construction companies
Even short-term employees can suffer an injury and file a claim. If seasonal hiring raises your employee count above the legal threshold, you may be required to carry coverage.
Independent Contractors and Workers’ Compensation in Florida
Independent contractors are treated differently under Florida law. In many industries, true independent contractors do not need to be covered under a company’s workers’ compensation policy. However, Florida uses specific criteria to determine whether someone is an employee, and misclassification can create significant liability.
A worker may be considered an employee rather than an independent contractor if they:
Work primarily for your business
Perform tasks under your direction or supervision
Use tools or equipment you provide
Follow a schedule you set
If a worker meets these criteria, they may need to be included in your workers’ compensation coverage, even if they are paid as a contractor.
Construction Has Stricter Rules
Florida has stricter requirements for the construction industry. Most workers who perform construction-related tasks are treated as employees unless they:
Hold a valid workers’ compensation exemption issued by the state, or
Carry their own workers’ compensation insurance
If a subcontractor does not have coverage or an exemption and is injured, the hiring contractor can be held responsible for benefits, back premiums, and penalties.
Why Misclassification Matters
Misclassifying workers can lead to:
Back premiums
Fines and penalties
Liability for medical and wage benefits
Florida reviews the working relationship, not the label or contract. Signing a 1099 agreement does not eliminate risk if the worker performs duties that legally classify them as an employee.
If your business regularly uses contract labor, reviewing classifications can help prevent unexpected costs and compliance issues.
What Workers’ Compensation Insurance Covers
Workers’ compensation insurance provides financial support when an employee suffers a work-related injury or illness. Coverage typically includes:
Medical Treatment
Doctor visits
Emergency care
Hospital stays
Diagnostic tests
Rehabilitation and physical therapy
Income Replacement
Partial wage replacement during recovery
Benefits for temporary or permanent disability
Rehabilitation and Retraining
Therapy to help employees return to work
Assistance when an employee needs a new role
Benefits for Families
Funeral or burial expenses when an employee dies
Financial support for dependents
Coverage varies by state and carrier. However, the goal is consistent. Workers’ compensation helps employees recover while reducing financial strain on employers.
Do I Need Workers’ Compensation Insurance Even If It’s Not Required?
Some small businesses are not legally required to carry workers’ compensation insurance. However, choosing not to carry coverage can create significant financial risk. Workplace injuries can happen in any environment, including offices, retail spaces, and home-based businesses.
Without workers’ compensation, employers may be responsible for the full cost of an injury, including:
Medical treatment
Lost wages
Rehabilitation expenses
Legal fees
Even a single claim can be expensive enough to strain a small business or interrupt operations. Workers’ compensation also limits legal exposure. In most states, employees who receive benefits cannot sue their employer for negligence, which can help prevent costly disputes.
Choosing to carry workers’ compensation voluntarily can be a smart business decision. It allows you to plan predictable insurance costs rather than face unpredictable expenses after an accident. For most small businesses, paying a premium is far easier than absorbing the cost of a claim on their own.
How Much Workers’ Compensation Insurance Costs
Premiums vary based on several factors, including:
Industry type
Payroll size
Job classifications
Businesses in higher risk industries, such as construction, typically pay more than office-based businesses. Safety programs and strong claims history can lower premiums.
Many employers are surprised that coverage is more affordable than expected. In most cases, the cost of insurance is far lower than the cost of managing a single claim without it.
Protect Your Team and Your Business
If you are unsure whether you need workers’ compensation insurance for your business, or you want help reviewing your current policy, the team at Darr Schackow Insurance can help.
We work directly with business owners to explain coverage requirements, evaluate risks, and match policies to each company’s needs. Our goal is to help you protect your workforce and keep your business running smoothly.
Contact our team to learn more about your options or to request a quote.