Short answer
In most states, if you have employees you are required to carry workers' compensation insurance, often from the first employee. The rules, exemptions, and treatment of owners and contractors vary by state, so the requirement depends on where you operate and how your workforce is classified.
Workers' compensation insurance pays for medical care and lost wages when an employee is hurt on the job, and in exchange it generally limits the employer's direct liability. Most states make it mandatory once you have employees, though thresholds and exemptions differ, and some states treat owners, officers, and independent contractors differently.
Misclassifying workers to avoid coverage is a common and costly mistake, since the state can assess penalties and the uninsured employer can be exposed to the full cost of an injury.
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