Workers’ compensation insurance requirements for Massachusetts employers

How does workers’ compensation insurance protect both Massachusetts employees and employers?

Worker’s compensation insurance can be beneficial to both employees and employers. On the one hand, coverage is designed to replace a portion of an employee’s pay (or cover medical expenses) should they become ill or hurt while working and need time off for recovery. A policy can also have benefits for the employer. That’s because a workers’ comp policy typically protects employers from litigation, meaning employees are unable to sue for losses that stem from illnesses or injuries sustained while on the job.

Next, let’s find out more about which employers need to have a policy in place.

Which employers in Massachusetts need to have workers’ compensation insurance?

In a nutshell, all employers that do business in Massachusetts are required to carry workers’ compensation insurance for their employees. An employer must also be covered by the policy if they are considered to be an employee.

Having a workers’ comp policy applies no matter:

• The number of hours an employee works: Workers’ comp covers full and part-time employees.
• Company headcount: If you have one or more employees, having insurance is a requirement.

If you work with independent contractors, you do not have to provide coverage (as long as they are truly independent). A worker falls into this category if they set their own hours and are not under your supervision or direction. For more information on how classification works, use our guide to understand the differences between employees and independent contractors.

Are there any exceptions?

There are some exceptions in place when it comes to workers’ comp coverage that it is important to be aware of. These include:

• Domestic employees who work fewer than 16 hours a week. Real estate or consumer goods salesmen who work on a commission, or on a buy/sell basis (other than in a retail establishment). In such cases, there must be a written contract stating that these individuals are  not treated as an employee under federal tax law.
• Taxi drivers who lease their cabs on a fee basis not related to fares collected and who are not treated as an employee under federal tax law.
• Persons engaged in interstate/foreign commerce, who are covered by federal law for compensation for injury or death.

You can see these exceptions listed in section one (paragraph four) of the Massachusetts workers’ comp law as well as in this resource.

Workplace poster

In addition to having a policy in place, employers are required to notify their employees of the name of the workers’ compensation insurance carrier. To do this, A Notice to Employees poster must be put up in a conspicuous spot in the workplace (so it can be viewed by staff members).

The workplace posters must also be available in all appropriate languages for your employees. The Department of Industrial Accidents (DIA) provides these posters in a number of languages as printable PDF documents. Also, your insurance company may be able to provide you with these posters. Just don’t forget to place these in an easy-to-see spot within the workplace! Employers who fail to post this information could face a $100 fine.

Filing for an exemption

In some cases, corporate officers who own at least 25% interest in the corporation can request an exemption from workers’ compensation coverage. This exemption does not apply to employees who are not corporate officers (they must still be covered).

Buying workers’ comp coverage

Business owners can buy workers’ compensation insurance from private insurance carriers and brokers directly. If you’re rejected for coverage by two or more insurance providers, insurance can be obtained through the Workers’ Compensation Rating and Inspection Bureau, which oversees a workers’ compensation assigned risk pool.

In addition, a license for self-insurance may be an option for qualified employers that:

• Have a minimum of 300 employees.
• Possess an annual standard premium of $750,000.00.

There is an application process, and employers interested in this option can find out more from the DIA’s Office of Insurance.

Are there penalties when employers don’t carry workers’ comp?

According to the employer’s guide to the workers’ compensation system in Massachusetts, an  employer who forgoes workers’ compensation may find themselves in hot water.

• Failure to comply may result in a stop-work order (SWO) from the Department of Industrial Accidents’ (DIA) Office of Investigations and fines of up to $100 per day (including weekends and holidays) until insurance is procured and the fine has been paid.
• Employers may appeal a SWO. Without an appeal, the business is supposed to close immediately (and remain closed) until proof of coverage is shared with the DIA.
• When an employer files an appeal against a SWO, the fine increases to $250 per day but the business may continue to operate.
• Employers who receive SWOs may face criminal charges, including up to a year in prison and/or a $1,500 fine if convicted.
• Uninsured employers may also be prohibited from applying for public contracts for three years.

More resources for Massachusetts employers

• Workers’ Comp Requirements
• Link to printable employee notices
• Department of Industrial Accidents
• Employers’ Guide to Workers’ Compensation
• Workers’ Compensation Act