Is Workers Comp Required for Every Employer in Massachusetts?

Almost every employer in Massachusetts must carry workers compensation, including a business with a single employee. M.G.L. c. 152, sec. 25A says that “every employer shall provide for the payment to his employees of the compensation provided for by this chapter,” either by buying a policy from an insurer, by joining a licensed self-insurance group, or by holding a self-insurance license from the state. There is no minimum headcount and no exemption for part-time staff. The exceptions that do exist are narrow and mostly written into the definitions in section 1: certain part-time domestic workers, corporate officers who own at least 25 percent of the company and file a written waiver, sole proprietors and partners covering themselves, and a short list of specialised occupations. An employer that should carry coverage and does not can be shut down with a stop work order under section 25C, fined per day, and prosecuted. For the injured worker, the more important point is that a missing policy does not end the claim. Section 65 created a state Workers’ Compensation Trust Fund that pays approved claims against uninsured employers, and section 66 lets the worker sue that employer in court with its usual defenses stripped away.

This article walks through who has to carry coverage, who does not, what happens to an employer that skips it, and what options an injured worker has when the policy turns out not to exist.

What Section 25A Actually Requires

The obligation is in one sentence, and it is written as a flat command rather than as a condition that applies above some size. Section 25A opens: “In order to promote the health, safety and welfare of employees, every employer shall provide for the payment to his employees of the compensation provided for by this chapter in the following manner.” It then lists the permitted ways of meeting that duty.

The first is “by insurance with an insurer or by membership in a workers’ compensation self-insurance group.” This is how nearly all small and mid-sized businesses comply. The second is a self-insurance license issued annually by the Department of Industrial Accidents, which the statute conditions on a sworn statement of assets and liabilities, a payroll report, and either a deposit of securities or a surety bond of at least twenty thousand dollars, plus reinsurance of at least five hundred thousand dollars against catastrophic losses. Self-insurance is a large-employer arrangement, and the financial conditions attached to it explain why.

Nothing in section 25A turns on how many people work for the employer, how many hours they work, or whether the business is profitable. A landscaping company with one seasonal laborer is under the same command as a hospital system. What decides whether the duty applies is whether the person doing the work is an “employee” and whether the business is an “employer,” and both of those words are defined in section 1.

Who Counts as an Employee

Section 1(4) defines an employee as “every person in the service of another under any contract of hire, express or implied, oral or written.” That is a deliberately wide net. The contract does not have to be written, and it does not have to be called a contract. Someone paid in cash to work regular shifts is in the service of another under an implied contract of hire.

The same subsection then lists exceptions, lettered (a) through (g). Most of them are specialised:

• masters and seamen on vessels in interstate or foreign commerce, who have federal remedies;
• professional athletes whose contracts pay wages during a disability from that employment;
• real estate salespeople affiliated with a broker under an agreement paying only commissions;
• direct sellers of consumer products paid entirely on sales under a written contract that treats them as non-employees for federal tax purposes;
• taxi drivers leasing a cab under a flat rental unrelated to fares, who are not treated as employees for federal tax purposes;
• employees of interstate or foreign commerce employers, but only to the extent federal law provides compensation or liability; and
• “a person whose employment is not in the usual course of the trade, business, profession or occupation of his employer.”

That last exception matters most in ordinary life. A dental office that hires someone once to paint its waiting room is engaging work outside the usual course of a dental practice. A painting contractor that hires the same person to paint the same room is not.

Part-time domestic workers

Section 1(4) also says the chapter “shall remain elective as to employers of seasonal or casual or part-time domestic servants,” and defines a part-time domestic servant as “one who works in the employ of the employer less than sixteen hours per week.” A household employing a nanny, housekeeper or home health aide for sixteen hours a week or more is therefore inside the mandatory coverage rule, not outside it. Homeowners are often surprised by this, because they do not think of themselves as running a business.

Owners of the business

Two ownership rules appear in section 1(4). First, the chapter “shall be elective for an officer or director of a corporation who owns at least 25 per cent of the issued and outstanding stock of the corporation,” but only “if the corporate officer provides the commissioner of industrial accidents with a written waiver of his rights.” Without the written waiver, the officer is covered like anyone else. Second, “a sole proprietor at his option or a partnership at its option shall be an employee,” and may elect coverage by buying insurance. A sole proprietor with no employees is therefore not required to insure himself, but the moment he hires one person, section 25A applies to that person.

Who Counts as an Employer, and Who Is Carved Out

Section 1(5) defines an employer broadly as an individual, partnership, association, corporation or other legal entity “employing employees subject to this chapter.” It then removes two groups.

The first is a homeowner hiring help on the home. The statute says “the owner of a dwelling house having not more than three apartments and who resides therein, or the occupant of a dwelling house of another who employs persons to do maintenance, construction or repair work on such dwelling house or on the grounds or buildings appurtenant thereto shall not because of such employment be deemed to be an employer.” An owner living in a two-family who hires a roofer is not the roofer’s workers compensation employer. The roofer’s own company is, if the roofer has one.

The second is volunteer organisations: “The word ‘employer’ shall not include nonprofit entities, as defined by the Internal Revenue Code, that are exclusively staffed by volunteers.” A nonprofit with even one paid employee is outside that carve out.

Public employers sit in a separate part of the chapter. Section 25B says section 25A “shall not apply to the commonwealth, the Massachusetts Turnpike Authority, the Massachusetts Bay Transportation Authority, the Massachusetts Port Authority” or the counties, cities, towns and districts covered by sections 69 to 75. Public employment is handled by those later sections instead of by the insurance mandate, under rules that depend on the public body and, for many cities, towns and districts, on whether the body has accepted the relevant section. A public employee with a work injury should read those sections, or have a lawyer read them, rather than assume section 25A applies. The same section adds that “any employer may bring an employee or employees for whom he is not required by this chapter to provide for the payment of compensation within the coverage of this chapter,” so an employer that is exempt can still choose to insure.

The 1099 Question

A great many workers are told they are independent contractors, paid on a Form 1099, and assume that settles whether they are covered. It does not, for a reason that sits in the text of two statutes.

The well-known Massachusetts three-part test for independent contractors is M.G.L. c. 149, sec. 148B. It presumes a worker is an employee unless the worker is free from control, the work is outside the usual course of the business, and the worker is customarily engaged in an independent trade. But the section begins with its own scope: “For the purpose of this chapter and chapter 151.” Chapter 149 is the wage and hour law and chapter 151 is the minimum wage law. By its own words, 148B does not govern chapter 152.

Chapter 152 uses its own definition, the section 1(4) language about “every person in the service of another under any contract of hire.” Nothing in that definition makes a tax form decisive. The question is the working relationship, looked at as it actually operated, and the exception in clause (g) for work outside the usual course of the employer’s business.

Chapter 152 also treats misclassification as a violation in its own right. Section 25C(10) debars from public contracts for three years an employer who “knowingly misclassifies employees, to avoid higher premium rates,” and section 25C(9) lets a losing bidder sue a competitor that won a contract through “the deliberate misclassification of employees for the purpose of avoiding full payment of workers’ compensation insurance premiums.” A worker labelled a contractor who is hurt on the job should report the injury and file the claim anyway. Whether the label holds is a question the Department of Industrial Accidents decides, not the employer.

Answer Capsule

Workers compensation is mandatory for nearly every Massachusetts employer with even one employee. M.G.L. c. 152, sec. 25A requires “every employer” to provide for the payment of compensation through an insurer, a self-insurance group, or a state self-insurance license. Exceptions are narrow: domestic workers under sixteen hours a week, corporate officers owning at least 25 percent who file a written waiver, sole proprietors and partners covering themselves, owner-occupants of homes with up to three apartments hiring repair work, all-volunteer nonprofits, and the specialised occupations in sec. 1(4). An uninsured employer faces a stop work order and daily penalties under sec. 25C. An injured worker of an uninsured employer can still claim benefits from the Workers’ Compensation Trust Fund under sec. 65(2)(e), or sue the employer under sec. 66 without its usual defenses.

What Happens to an Employer That Skips Coverage

Section 25C is the enforcement section, and it is built to stop the business rather than simply to bill it.

When the commissioner or a designee determines that a required employer has failed to provide for compensation, “a stop work order shall be served on said employer, requiring the cessation of all business operations at the place of employment or job site.” The order takes effect immediately unless the employer produces proof of coverage and pays a civil penalty of “one hundred dollars per day for each day such employer was not in compliance,” counting from the date of service.

The employer has ten days to appeal and gets a hearing within fourteen days of the appeal. If the hearing finds the employer was not insured, the order takes effect at once and lifting it requires proof of coverage plus a penalty of “two hundred and fifty dollars per day for each day such employer was not in compliance.” Law enforcement must assist the commissioner, including by preventing employees from remaining at the job site.

The section protects the employees caught in the shutdown. Under section 25C(4), “any employee affected by a stop work order pursuant to this section shall be paid for the first ten days lost,” and that time counts as time worked under the wage law.

Criminal exposure sits alongside the civil penalty. Section 25C(5) provides that an employer who fails to insure “shall be punished by a fine of not more than one thousand five hundred dollars or by imprisonment for not more than one year, or both,” and that for a corporation “the president or treasurer or both shall be liable for said punishment.” Each further failure after notice is a new violation.

The rest of the section closes the practical doors. State and local licensing agencies must withhold business and building permits from an applicant who has not shown compliance. No public body may award a public works contract without proof of coverage. Penalties and trust fund judgments become a lien on the employer’s property. And under section 25C(11), any three persons may bring a civil action against a non-complying employer after ninety days’ notice by certified mail, in which the employer is liable for all amounts that should have been paid; the plaintiffs collect a capped share plus costs and attorney fees, and the remainder of the recovery is deposited into the Workers’ Compensation Trust Fund.

If You Were Hurt and Your Employer Had No Policy

This is the situation the searches behind this question are usually really about. An injured worker files a claim and learns there is no insurer to send it to. The chapter anticipates exactly that, and it gives the worker two separate routes.

Route one: the Workers’ Compensation Trust Fund

Section 65(2) establishes the Workers’ Compensation Trust Fund and lists what it pays. Clause (e) covers “payment of benefits resulting from approved claims against employers subject to the personal jurisdiction of the commonwealth who are uninsured in violation of this chapter.” The fund is paid for by assessments on insured and self-insured employers across the state, which means the worker is not dependent on the uninsured employer having money.

Three limits come with it. The claimant must not be “entitled to workers’ compensation benefits in any other jurisdiction,” which matters for workers who also worked across a state line. No benefits under section 28, the provision that doubles compensation where the employer’s serious and wilful misconduct caused the injury, are payable out of the fund. And no interest under section 50 is payable from the fund.

The claim is not automatic. Section 65(13) says fund claims “shall be handled in accordance with section ten,” the ordinary claim procedure at the Department of Industrial Accidents, and that “no voluntary payment for any period of time shall alone be held to foreclose the fund from defending any issue involved in a claim.” The fund can contest whether the injury is work-related, whether the person was an employee, and anything else an insurer could contest. On motion, “an administrative judge may join the uninsured employer as a party.” Once the fund pays, section 65(8) lets it sue the uninsured employer to recover what it paid plus reasonable attorney fees, within twenty years of the claim.

The benefits themselves are the chapter’s ordinary benefits: weekly wage replacement under sections 34 and 35 and medical care under section 30. What those pay and how long they last are covered in how long workers comp lasts in Massachusetts and whether workers comp covers medical bills.

Route two: a lawsuit against the employer, with its defenses removed

Ordinarily a Massachusetts employee cannot sue the employer for a work injury, because coverage under chapter 152 replaces that right. The trade and its one fault-based exception are explained in whether you can get workers comp if the accident was your fault. That trade assumes the employer held up its end by insuring.

Section 66 deals with the employer that did not. It governs “actions brought against employers to recover damages for personal injuries” sustained by an employee in the course of employment, and it removes the defenses that would otherwise defeat such a suit. In such an action “it shall not be a defense”:

1. “That the employee was negligent;”
2. “That the injury was caused by the negligence of a fellow employee;”
3. “That the employee had assumed voluntarily or contractually the risk of the injury;”
4. “That the employee’s injury did not result from negligence or other fault of the employer, if such injury arose out of and in the course of employment.”

The fourth item is the striking one. Read with the rest, it means an uninsured employer cannot escape a work-injury suit by proving it did nothing careless. Section 67 confirms that section 66 “shall not apply to actions to recover damages for personal injuries received by employees of an insured person or a self-insurer,” so this route exists only because the employer broke the insurance rule. Section 67 also says that paragraph 4 does not apply where the employer “has a right of election as provided in paragraph 4 of section one,” which covers employers of the part-time domestic workers for whom coverage is optional.

Section 66 also sets its own time limit, and it is long: such actions “shall be commenced within twenty years from the date the employee first became aware of the causal relationship between the disability and his employment.” That is very different from the three-year rule that governs ordinary injury suits, explained in the Massachusetts statute of limitations for personal injury. A long deadline is not a reason to wait. Witnesses scatter and uninsured businesses close.

Whether to pursue the fund, the lawsuit, or both in some sequence depends on the employer’s assets, the size of the injury, and the facts of the employment, and it is the kind of choice worth talking through with a lawyer before either is filed.

The Subcontractor Problem on Construction Sites

Construction work creates a common version of this problem. A general contractor carries insurance, a subcontractor does not, and one of the subcontractor’s workers is hurt on the site.

Section 18 addresses it directly. Where an insured person contracts with an independent contractor, or that contractor subcontracts, to do work that is part of the insured’s own business, “the insurer shall pay to such employees any compensation which would be payable to them under this chapter if the independent or sub-contractors were insured persons.” The general contractor’s insurer then has the right to recover from the uninsured subcontractor.

Two conditions limit the rule. It “shall not apply to any contract of an independent or sub-contractor which is merely ancillary and incidental to, and is no part of or process in, the trade or business carried on by the insured,” and it does not apply where the injury happened away from the premises where the contractor was doing the work. The statute adds that “premises” includes “the public highways if the contract requires or necessitates the use of the public highways,” which matters for road and utility work.

For a worker, the practical lesson is to identify every company above the direct employer on the job. The injury may be covered by an insurer the worker has never heard of. Construction injuries that also involve a negligent party other than the employer are covered in construction site injury claims in Massachusetts.

What to Do if You Think Your Employer Is Uninsured

Report the injury to the employer in writing and get medical care, exactly as you would with an insured employer. The notice rules in section 41 do not relax because the employer broke the law.

Ask the employer, in writing, for the name of its workers compensation insurer and policy number. A refusal or a vague answer is itself useful information.

Keep proof of the employment relationship: pay stubs, texts assigning shifts, a schedule, photos of the job site, the names of coworkers and supervisors, and anything showing who controlled the work. If you were paid in cash or on a 1099, this record is what will establish that you were in the service of another under a contract of hire.

File the claim with the Department of Industrial Accidents, the agency that administers chapter 152. A claim against an uninsured employer proceeds through the same section 10 process as any other claim, with the Trust Fund as the paying party if the claim is approved. Section 10(1) says a claim for weekly compensation will not be accepted unless it comes with the insurer’s notice of denial or “at least thirty days have passed from the alleged onset of disability,” so where there is no insurer to issue a denial, the thirty day mark is the practical starting point for weekly benefits.

Keep the lawsuit route in mind while the claim proceeds. Fees in the claim process are regulated by statute; how that works is explained in how workers comp attorney fees work in Massachusetts. If the employer lets you go after the injury, the protections described in what happens if you are fired while on workers comp still apply.

Frequently Asked Questions

Q: Is workers comp required in Massachusetts if I only have one employee?

A: Yes. M.G.L. c. 152, sec. 25A requires “every employer” to provide for the payment of compensation, and nothing in the section sets a minimum number of employees or hours. A business with a single part-time employee is covered by the same rule as a large company, unless the worker falls within one of the specific exceptions in sec. 1(4).

Q: Do I need workers comp for workers I pay on a 1099?

A: The tax form does not decide it. The three-part independent contractor test in c. 149, sec. 148B applies by its own terms “For the purpose of this chapter and chapter 151,” not to workers compensation. Chapter 152 asks whether the person is “in the service of another under any contract of hire,” and sec. 25C penalises employers who knowingly misclassify employees to avoid premiums.

Q: Does a homeowner need workers comp for a nanny or housekeeper?

A: If the worker is employed sixteen hours a week or more, generally yes. Section 1(4) makes coverage elective only for “seasonal or casual or part-time domestic servants,” and defines part-time as “less than sixteen hours per week.” Separately, an owner living in a home of not more than three apartments who hires maintenance, construction or repair work on it is not treated as the employer for that work under sec. 1(5).

Q: Can a business owner opt out of workers comp in Massachusetts?

A: Some can, for themselves only. A corporate officer or director owning at least 25 percent of the stock may elect out, but only by filing a written waiver with the commissioner of industrial accidents. Sole proprietors and partners are not required to cover themselves and may choose to. None of these options excuses coverage for anyone else the business employs.

Q: What is the penalty for not having workers comp in Massachusetts?

A: Under M.G.L. c. 152, sec. 25C, the employer can be served with a stop work order shutting down operations, with a civil penalty of one hundred dollars a day of non-compliance, rising to two hundred and fifty dollars a day if the order is upheld after a hearing. Criminal penalties of a fine up to one thousand five hundred dollars or up to one year in jail, or both, also apply, and a corporation’s president or treasurer can be held liable.

Q: I was hurt at work and my employer has no insurance. Can I still get benefits?

A: Usually, yes. Section 65(2)(e) directs the Workers’ Compensation Trust Fund to pay approved claims against uninsured employers subject to Massachusetts jurisdiction, as long as you are not entitled to workers compensation benefits in another jurisdiction. The claim goes through the ordinary Department of Industrial Accidents process, and the fund can contest it the way an insurer would.

Q: Can I sue my employer if it did not carry workers comp?

A: Yes. Section 66 allows a suit against an uninsured employer and removes its defenses that you were negligent, that a coworker was negligent, that you assumed the risk, and that the employer was not at fault where the injury arose out of and in the course of employment. Section 67 limits this to uninsured employers, and the suit must be brought within twenty years of when you became aware the disability was caused by the work.

Q: Am I covered if I work for an uninsured subcontractor on a construction site?

A: Possibly, through the general contractor’s insurer. Under sec. 18, when an insured company hires a contractor or subcontractor to do work that is part of its own business, its insurer pays the subcontractor’s injured employees as if the subcontractor were insured. The rule does not apply to work merely incidental to the insured’s business or to injuries away from the premises where the work was being done.

Q: Is Jimmy Knows AI giving me legal advice?

A: No. This is general information about Massachusetts law, not legal advice, and reading it does not create an attorney client relationship. Whether an employer was required to insure, and which remedy fits an injury, depends on facts not in this article. For advice about your own situation, speak with a Massachusetts attorney.

Talking to a Lawyer

Most people who ask whether workers comp is required are asking a second question underneath it: my employer says it does not have coverage, so am I out of luck? Under Massachusetts law the answer is usually no, but the two routes in this article behave very differently. A Trust Fund claim runs through the administrative process with a state fund on the other side. A section 66 lawsuit runs through the courts against a business that may or may not have assets. Choosing between them, or pursuing both, turns on facts that are worth getting right early.

The documents that matter most are the ones that prove the job existed: pay records, messages, schedules and the names of the people who directed the work.

Jim Glaser Law can be reached at (617) JIM-WINS. The line is answered 24 hours a day. The first telephone consultation is offered without charge.