In almost every U.S. state, employers are required to carry workers’ compensation insurance if they have a certain number of employees. If you’re a business owner in Illinois, you’ll need to purchase workers’ comp insurance if you have at least one employee that doesn’t meet the state’s exemptions criteria.

In this article, we’ll go over who you need to cover, who is exempt, and possible penalties for non-compliance.


How does workers’ compensation insurance in Illinois work?


The state of Illinois requires you to carry workers’ compensation insurance as soon as you have one employee. Most employers will purchase coverage via the private insurance market. If you can’t find a suitable insurer on the private market, you can purchase coverage from the National Council of Compensation Insurance. Some larger employers can also qualify to become self-insurers.


Who needs workers’ compensation insurance in Illinois?


All employees in Illinois must be covered by workers’ compensation unless they legally opt out of coverage or are on the list of “automatic coverage” detailed in Section 3 of the Illinois Workers’ Compensation Act.

Most sole proprietors, partners, members of LLCs, and corporate officers can opt out of coverage. They can still participate in workers’ compensation if they choose to. However, if they work in a business that is physically hazardous, like construction or roofing, they may be required to purchase coverage for themselves regardless of their ownership or partnership status.

As a business owner or sole proprietor, you don’t have to purchase workers’ compensation insurance for yourself. That doesn’t mean you shouldn’t get coverage. Sustaining an injury or illness while performing your work can lead to sizable hospital bills, medical costs and a lengthy recovery period. Investing in workers’ comp for yourself could save you from a brutal financial setback.


What are the penalties for not having workers’ comp in Illinois?


Businesses that fail to properly insure their employees are subject to steep fines and penalties from the state of Illinois. If you knowingly and willingly fail to provide coverage for your employees, you could face a minimum fine of $10,000. Negligent failure to provide coverage is a misdemeanor, and knowing or willful failure to provide coverage is a Class 4 felony. Felony convictions could result in a $25,000 fine and up to 3 years imprisonment.


What does workers’ comp cover?

Medical costs

If one of your employees is injured or becomes ill on the job, workers’ comp can cover their immediate medical expenses such as ambulance rides, emergency room visits, x-rays, surgery and prescription medications.

For example, if a kitchen employee reaches into a sink and slices their hand on a broken glass, they might require medical attention. Workers’ comp could cover the costs of their emergency room visit, stitches and pain management prescriptions.

Lost Wages

Many work-related incidents can leave employees unable to work for several weeks or months. Workers’ comp can provide some relief for employees in the form of partial wage replacement.

If an employee breaks their foot in a work-related accident, they could end up stuck at home for multiple months. While they’re out of work, workers’ comp would cover some of their lost wages.

Ongoing Care

Some work-related injuries require long-term care such as physical therapy or pain management. Often, these injuries are more the result of repetitive workplace stress rather than a single traumatic incident. Chronic back issues for construction workers and carpal tunnel syndrome for office employees are two common examples of the types of workers who must receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.

Death Benefits

If the unthinkable happens and an employee passes away because of a workplace incident, workers’ comp can cover funeral costs and other death benefits for the deceased worker’s family or beneficiaries.