Do businesses need workers compensation insurance before hiring?

Workers' Compensation Insurance Requirement Before Hiring in Illinois

In Illinois, businesses must secure workers' compensation insurance before hiring employees. This insurance is mandatory to provide coverage for medical expenses and lost wages if an employee is injured on the job.

Operational Steps for Compliance

• Obtain Workers' Compensation Insurance: Before onboarding employees, arrange coverage through a private insurer or the Illinois Workers' Compensation Commission.
• Verify Coverage: Maintain proof of insurance as part of your business records and provide it upon request during audits or compliance checks.
• Employee Classification: Correctly classify employees to ensure proper premium calculation and compliance with insurance requirements.
• Recordkeeping: Keep detailed records of all employees covered under the policy and any workplace injuries reported.

Additional Considerations

As of 2026, businesses with one or more employees, including part-time and seasonal workers, must carry workers' compensation insurance. This requirement applies regardless of the employee's role or hours worked.

Failure to maintain required insurance can result in penalties, fines, and potential liability for workplace injury costs. Integrating workers' compensation insurance management with payroll and compliance systems can streamline operations.