Do I Need Workers’ Comp Insurance? A Guide for MA & RI Employers

Key Takeaways

Massachusetts and Rhode Island have different set of state laws regarding worker’s compensation coverage. This guide aims to help MA & RI employers understand the legal nuances of worker’s compensation law so that they can provide the right coverage and avoid penalty.

• In Massachusetts, workers’ compensation coverage is generally required even when a business has just one employee.
• Rhode Island generally requires employers with one or more employees to have coverage too, although there are some exceptions.
• The rules are not the same for everyone. Employee status, independent contractors, business owners, partners, and some corporate officers can all be treated differently.
• Not having the required coverage can leave a business facing penalties and other legal problems.
• Workers’ compensation can provide benefits when an employee suffers an injury or illness related to their work.
• It is better for an employer to know what coverage they need before an injury happens, rather than trying to figure it out after a claim is filed.

If you own or operate a business in Massachusetts or Rhode Island, you may have asked yourself, “Do I need workers comp insurance?”

For most employers, the answer is definitely yes. 

Workers’ compensation is not just another form of business insurance. In the states of Massachusetts and Rhode Island, state law generally requires employers to provide coverage for their workers.

What is required may vary by state, given the nature of the business and who is employed by the business. Certain business owners and workers might not have to get the insurance, but such exceptions are quite limited.

Being aware of the requirements can allow employers to avoid penalties for non-compliance and also know what to do if an employee gets injured.

What Is Workers’ Compensation Insurance?

Workers compensation is the benefits paid to employees who sustain injury or illness from work, but the benefits differ on a case by case basis with each state. Compensation for lost wages, treatment by a doctor or medical professional are just some benefits that apply.

A workers’ compensation policy is typically bought by the employer through an insurance carrier. If an employee receives a covered workplace injury, the claim is processed through the workers’ compensation system and the employer’s insurer.

General liability insurance covers claims against the business for things such as injuring customers or damaging the property of others. On the other hand, workers’ compensation is for qualifying work-related injuries and illnesses to employees.

Do I Need Workers Comp Insurance in Massachusetts?

Generally, yes.

Massachusetts requires employers operating in the state to carry workers’ compensation insurance for their employees. The requirement generally applies regardless of how many employees a business has or how many hours they work. (Massachusetts Government)

That means a Massachusetts business should not assume it is exempt simply because it has a small workforce or only part-time employees.

Massachusetts also looks at whether someone is actually an employee rather than simply how the business classifies or pays that person. Calling someone an independent contractor or issuing a 1099 does not automatically determine their status under workers’ compensation law. 

Who may be exempt in Massachusetts?

There are limited exceptions.

For example, Massachusetts allows certain business owners, including sole proprietors and partners, to remain outside mandatory coverage for themselves. Certain LLC members may also be exempt from coverage for themselves. Employees who work for the business generally still need to be covered. 

Certain corporate officers who own at least 25% of the corporation may also request an exemption from workers’ compensation coverage. That exemption does not remove the requirement to cover other employees. 

These rules can depend on how the business is structured. So, employers should not assume that being an owner means the company has no workers’ compensation obligations.

Do I Need Workers Comp Insurance in Rhode Island?

In most cases, yes.

In Rhode Island, employers with one or more workers generally need workers’ compensation insurance, although there are some exceptions. The Rhode Island Department of Labor and Training says that every person, firm, public service, or private corporation that regularly employs workers in the same business is subject to the state’s Workers’ Compensation Act.

(RI Department of Labor & Training)

Rhode Island also has specific exemptions.

Sole proprietors, partners, and independent contractors can fall outside the workers’ compensation system in certain circumstances. Certain domestic, agricultural, and other categories of workers may also be exempt. 

Corporate officers can have different rules as well. For example, some officers may file a waiver to give up workers’ compensation rights under Rhode Island law.

The important point is that an employer should determine whether an individual is legally an employee before deciding that workers’ compensation coverage is unnecessary.

What Happens If an Employer Does Not Have Required Coverage?

Skipping workers’ compensation insurance can create serious problems for a business.

Employers in both Massachusetts and Rhode Island who do not meet their workers’ compensation obligations may be penalized.

Rhode Island has a provision (17 R. I. Gen. Laws. 28 20 2 (1) 2) under which an employer who does not maintain workers’ compensation insurance for his or her employees is fined $1,000 per day. The business may also face criminal penalties, including a potential fine and imprisonment, and the state can take action to close a business operating without required insurance.

Massachusetts also imposes penalties for failing to comply with workers’ compensation requirements. The state’s Department of Industrial Accidents provides information about fines and enforcement for employers operating without required coverage.

The financial consequences are only part of the concern.

A workplace injury can become much more complicated when an employer does not have the required insurance in place. Instead of having an insurance carrier handle a covered claim under the workers’ compensation system, the employer may face direct financial and legal exposure.

Can an Employee File a Workers Compensation Lawsuit?

Workers’ compensation typically creates a framework that allows employees with qualifying work-related injuries to receive benefits without having to prove that their employer was negligent.

This doesn’t mean that every injury at work will lead to a personal injury lawsuit.

Workers’ comp and civil cases are separate matters. An employee may be able to file a lawsuit against an employer or another party, depending on the circumstances and the applicable state law.

For employers, this is another reason not to consider workers’ compensation coverage optional. Having the right coverage in place helps ensure that employee injury claims are handled according to the rules that apply in their state.

If a worker is injured, the employer should follow the required reporting process and notify its workers’ compensation insurance company promptly.

Rhode Island, for example, requires employers to report workplace injuries to their workers’ compensation insurance company. The state can impose a $250 penalty on an employer that fails to notify its insurer of an injury.

What About Independent Contractors?

This is an area where employers need to take some extra caution.

Calling someone an independent contractor does not necessarily protect a business from workers’ compensation requirements.

Massachusetts has specific laws for defining who is an independent contractor and who is an employee. Rhode Island makes that distinction as well when it comes to the workers’ compensation system. 

Before an employer decides to classify a worker as an independent contractor, they should make sure the classification meets the requirements of the state.

Misclassification may lead to issues with workers’ compensation, payroll, taxes, and other responsibilities.

MA vs. RI Workers’ Compensation Requirements

Although Massachusetts and Rhode Island both require workers’ compensation coverage for most employers, the details are not identical.

With the complexities of these exemptions and classifications, employers need to check before assuming.

The Bottom Line for MA & RI Employers

Do I need workers comp insurance? As an employer in Massachusetts or Rhode Island, for the most part, you will need to carry workers’ compensation coverage for your employees, with some exceptions. 

Reach out to Tapalian Law for a free consultation at 401-552-5000. 

Frequently Asked Questions

Do I need workers comp insurance if I only have one employee?

If you’re an employer in Massachusetts or Rhode Island, you are generally required to carry workers’ compensation insurance for anyone you directly employ, with a few exceptions.

Do part time workers need workers comp?

In general, yes. Workers who do not work full time in the state of Massachusetts are eligible for benefits, even if they only work a few hours a week, subject to a few exceptions. Also, in Rhode Island, employers are generally required to provide coverage for part-time employees.

Do 1099 workers require workers compensation?

Not necessarily. Being paid as an independent contractor (1099) does not automatically determine whether a person or worker is covered by workers’ compensation. State laws for determining if a worker is an employee or independent contractor are still in effect.

Can you sue an employer for not having workers comp?

An employer with no coverage could potentially face penalties and liabilities. Whether or not a worker who is injured can pursue an action against his employer outside of the workers’ compensation system will depend upon the situation and state.

Is workers compensation the same as general liability insurance?

No. Workers’ compensation insurance provides coverage to employees for work-related injuries. It is a separate type of coverage from general liability insurance and does not substitute for it.

Note: This article is intended for informational and educational purposes only; it should not be construed as legal advice. There are a number of factors specific to each business which may impact your obligations, and laws and regulations are subject to change. Please consult a qualified attorney if you have specific questions about workers’ compensation.