Guide
Workers' comp exemption: checking your state's rule
Exemption is state law, not a national rule, and it is the one requirement where a confident answer from the wrong state is worse than no answer.
Ask for the document the state issues, not the sub's word. Which document — and whether an exemption is available at all — is set by your state's workers' compensation agency, listed below.
Key takeaways
- Exemption is decided by state law, so a rule you learned on a job in another state may be simply wrong where you are standing.
- An exemption normally covers the owner only, and only while they have no employees. The day they put someone on a crew, the exemption usually stops answering the question.
- Ask for the state-issued document, not a statement. Most states that allow an exemption issue something you can hold; a sub saying ‘I'm exempt’ is not a record you can produce at audit.
- Texas is the genuine outlier — the one state where private employers may generally opt out of the workers' compensation system entirely, which makes advice written for Texas misleading everywhere else and vice versa.
By the Sealinn team · 4 min read · Updated July 2026 · Written for general contractors
Why this page does not give you the answer
You came here for a table of states with a yes or a no in each row. We are not going to publish one, and the reason matters: those rules are statutes, they differ in ways a single column cannot hold, and they change. A table like that is confidently wrong somewhere the day it ships, and nothing about it tells you which row went stale.
What does not change is the shape of the question, and where the answer lives. So this page covers the first and points at the second.
The shape of the question, everywhere
Nearly every state requires workers' compensation once a business has employees. The exception almost always concerns the owner — a sole proprietor, a partner, and in many states a corporate officer or LLC member may elect not to cover themselves. Three things follow from that, and they hold broadly even though the details do not:
- It covers the person, not the business. An owner who is exempt is exempt for themselves. Their employees are a separate question with a different answer.
- It ends when they hire. The most common way an exemption stops being true is that the sub brought a crew — and nobody thinks to revisit the paperwork when they do.
- Some states issue a document; others do not. Where one exists, that document is what you collect. Where none exists, what you can hold is a certificate showing coverage — which is why an exemption you cannot evidence is a problem at audit even when it is entirely genuine.
The cost lands on you either way
If a sub has no workers' compensation and you cannot evidence a valid exemption, your own carrier will typically treat what you paid them as your payroll at your premium audit — with no claim, no incident, and nothing having gone wrong. That is the usual first cost of this, well before anyone gets hurt.
The definitional side of this — what an exemption is, and what to do when a sub claims one — is on workers' comp exemption. What it costs you months later is on what your insurance auditor will ask for.
Where to check, by state
The agency below is the authority for that state. Its page is current by definition, which is the property no table on this site can offer. If your state is not listed, search for your state's name plus ‘workers compensation’ — the authority is a state agency, not a commercial site, and it is the one worth reading.
| State | Authority | Where to look |
|---|---|---|
| Texas | Texas Dept. of Insurance, Division of Workers' Compensation | tdi.texas.gov/wc/employer |
| California | Dept. of Industrial Relations, Division of Workers' Compensation | dir.ca.gov/dwc |
| Florida | Dept. of Financial Services, Division of Workers' Compensation | myfloridacfo.com/division/wc |
| New York | Workers' Compensation Board | wcb.ny.gov |
| Illinois | Workers' Compensation Commission | ilworkcomp.com |
| Pennsylvania | Dept. of Labor & Industry | dli.pa.gov |
| Georgia | State Board of Workers' Compensation | sbwc.georgia.gov |
| Washington | Dept. of Labor & Industries | lni.wa.gov |
| Indiana | Workers' Compensation Board | in.gov/wcb |
| North Carolina | Industrial Commission | ic.nc.gov |
Texas, which is genuinely different
Texas is worth calling out because advice written elsewhere does not transfer. It is the one state where private employers may generally opt out of the workers' compensation system altogether rather than qualifying for a narrow exemption — so a Texas sub without coverage may be entirely lawful, and the protections you would normally rely on work differently as a result. If you contract in Texas, read the state's own employer material rather than a national summary. If you do not, be careful with advice that turns out to have been written for Texas.
What to collect either way
- Ask the question in writing, and ask for the basis: which state, and on what grounds.
- Ask for the state's document if their state issues one, rather than accepting a statement.
- Note the date you verified it and what you saw. An exemption is a point-in-time fact, and the thing that changes it — hiring — is invisible to you.
- Re-ask when the job changes. A sub who arrives alone and returns with two people is a different question, not the same one.
- If they hire, expect coverage plus the waiver. The workers' comp waiver of subrogation in your favor is endorsement WC 00 03 13, a separate document their carrier adds — see waiver of subrogation.
None of this is legal advice, and where a decision turns on the statute the right next call is your own counsel or your broker — not a page on a software company's website, including this one.
Where this comes from
- Texas Department of Insurance, Division of Workers' Compensation — Employer information (Texas is the one opt-out state)
- California Department of Industrial Relations — Division of Workers' Compensation FAQs — who must be covered
- NCCI — Countrywide workers' compensation forms and rules
- Internal Revenue Service — Independent contractor, self-employed, or employee
Every sub, every state, one list.
Sealinn tracks which subcontractors have coverage, which have an exemption on file, and which you have not asked yet.