Each state has various rules and regulations regarding workers’ compensation. The obligation to provide workers’ compensation varies by state, type of business/industry, employers’ status, and the number and type of employees. However, nearly all states have “compulsory” laws that require most employers to purchase workers’ compensation insurance with only two exceptions. These are called “elective” states.
New Jersey – Technically employers may choose not to carry workers’ compensation in New Jersey but a complex matrix of rules and regulations around workers’ compensation pretty much makes New Jersey a compulsory state for all practical purposes. The ability to truly opt out is rare.
Texas – Employers in Texas can accept the law or may choose to non-subscribe. Certain employers such as cities, counties, and school districts are required to provide coverage despite the spirit of the state’s elective law.
In either case, if an employer elects to not carry workers’ compensation insurance the employer can still be held liable for medical expenses and lost wages caused by an injury on the job.