Workers’ compensation
State-regulated insurance (or equivalent) for employee work-related injuries and illnesses.
Plain definition
Workers’ compensation provides medical care, wage replacement, and related benefits to employees injured on the job, in exchange for limited employer liability as defined by state law. Most states require coverage when you have employees; rules for owners, contractors, and sole proprietors vary widely.
Why it matters
One uninsured workplace injury can mean medical bills, lawsuits where allowed, and regulatory penalties. Clients often require proof of workers’ comp before you bid jobs.
Example
A part-time employee lifts a box and herniates a disc. Workers’ comp pays covered medical and partial lost wages per state benefit schedules.
Common misunderstanding
Calling someone a 1099 contractor does not automatically exempt you from workers’ comp rules if state law treats them as an employee for coverage purposes.
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