Having workers’ compensation insurance is a must-have for most employers in Maryland, but keeping track of all the requirements can be a bit time-consuming.
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Key takeaways
- Maryland requires workers’ compensation insurance for almost all businesses and non-profits with one or more employees, including seasonal, temporary, and remote workers
- Independent contractors (1099s) are generally exempt, but misclassifying employees to avoid coverage can lead to strict legal penalties and liability
- Remote workers based in Maryland are fully covered for work-related injuries, though standard commutes generally fall under the “coming and going” exclusion
- Operating without a required policy can result in fines up to $10,000, and employers must submit injury reports within 10 days for qualifying incidents
In this guide, we’ll cover the basics of who should have coverage and how businesses can obtain a policy.
Why is it important to have workers’ compensation insurance?
Workers’ compensation is designed to replace a portion of an employee’s wages should they become sick or injured while on the job (and need time away to recover). This protects your employees and can also be beneficial for employers. Why? Because when workers’ compensation is in place, employees typically cannot sue their employers for losses resulting from illnesses or injuries sustained at work.
Which employers in Maryland must carry workers’ compensation insurance?
With few exceptions, every employer with one (1) or more employees, full-time or part-time, is required by law to provide workers’ compensation insurance. Exceptions include sole proprietors or business partners, independent contractors, and agricultural employers with less than three (3) employees or an annual payroll for full-time employees that does not exceed $15,000.
The table below gives small business owners an instant visual of who’s covered — and when exceptions apply
| Employer | Requirement |
| Most employers | Must carry coverage if they have one or more employees, full-time or part-time. |
| Sole proprietors/partners | Not required to have coverage, but may choose to purchase it voluntarily. |
| Independent contractors (1099) | Not covered under Maryland wage laws, but proper classification is crucial. |
| Agricultural employers | Exempt if they have fewer than three employees or annual payroll under $15,000 for full-time staff. |
Do 1099 employees need workers’ comp in Maryland?
Per the Maryland Department of Labor, “Maryland wage and employment laws do not apply to independent contractors.” That means 1099 workers generally don’t need to be covered by a workers’ compensation policy. However, if you’re unsure whether someone qualifies as an independent contractor, it’s a good idea to speak with an attorney or employment expert to confirm your obligations.
What is the Maryland Workers’ Compensation Commission?
The Maryland Workers’ Compensation Commission lists its mission as follows:
“The Maryland Workers’ Compensation Commission seeks to secure the equitable and timely administration of the provisions of the Maryland Workers’ Compensation Law on behalf of its customers, the injured workers and their employers, by providing an efficient and effective forum for the resolution of individual claims.”
In a nutshell, the agency has resources for both employers and employees in the event a work-related incident happens and needs to be addressed. The Commission provides free forms and resource materials for employers to properly file workers’ compensation claims.
- For employees, the agency offers an online method to check on their pending or approved workers’ compensation claim status.
- Or workers can reach their help desk by phone by calling: (410) 864-5100.
Purchasing workers’ comp in Maryland
Workers’ compensation insurance can be purchased from private carriers or — if a high-risk company — from competitive state funds. If an employer meets certain requirements, self-insurance is another option as well. To go this route, an employer would need to have a net worth of $1,000,000 and receive approval from Maryland’s Workers’ Compensation Commission.
How much does workers’ compensation cost for small businesses in Maryland?
Workers’ compensation costs for small businesses in Maryland depend on several factors, including business size, industry type, number of employees, and claims history. While Maryland doesn’t set a fixed premium rate for workers’ compensation insurance, it is regulated by the State Workers’ Compensation Commission (WCC), and premiums are typically based on job classification and payroll.
The WCC also oversees the filing and approval of insurance rates, ensuring that they align with industry standards. Small businesses should obtain quotes from insurers for an accurate premium estimate based on their unique needs.
For reference, data from the National Academy of Social Insurance (NASI) indicates that the average workers’ compensation cost in Maryland is $0.87 per $100 of payroll.
However, premiums can vary widely by industry, with lower rates for professions like speech therapy and higher rates for higher-risk industries such as roofing and construction.
Are there penalties if an employer does not have a workers’ compensation policy?
There can be more than a slap on the wrist should an employer go without workers’ compensation. The result could be fines of up to $10,000 and the officers of the company would be liable for the cost. Keep in mind that purchasing a policy is the employer’s responsibility and it is considered a misdemeanor in Maryland to deduct workers’ compensation costs from worker wages.
While you’re updating your workers’ comp policy, don’t forget to double-check your pay rates. For compliance-minded companies, our guide to the Maryland minimum wage explains how to navigate the complex state and county rates.
You may find some of the other resources we provide useful after learning about workers’ compensation requirements. For example, as your team grows (or if you are just starting out), you might want to know how much Maryland payroll taxes are in order to avoid withholding errors and understand what the state requires.
Bottom line: Workers’ comp is worthwhile coverage
Having a workers’ comp policy is more than a legal requirement. In many cases, it can provide peace of mind for both you and your staff. With a plan in place, workers can rest easy knowing that they will be taken care of if they get hurt or sick on the job. And in the vast majority of cases, business owners can feel confident that they’ll be protected from litigation due to work-related injuries or illnesses that workers experience. If you have questions or are ready to set up a plan for your business, get in touch with our team.
Please note all material in this article is for educational purposes only and does not constitute tax, benefits or legal advice. You should always contact a qualified tax, legal or financial professional, in your area for comprehensive tax or legal advice.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.