Do businesses need workers compensation insurance before hiring?

Workers' Compensation Insurance Requirements in South Carolina Before Hiring

In South Carolina, businesses must secure workers' compensation insurance before hiring employees if they meet certain criteria. This insurance covers medical expenses and lost wages for employees injured on the job, protecting both workers and employers.

When Workers' Compensation Insurance Is Required

• Number of Employees: Businesses with four or more employees, including part-time workers, are generally required to carry workers' compensation insurance.
• Type of Business: Most private employers fall under this requirement. Certain agricultural and domestic service employers may have different rules.
• Subcontractors: If you hire subcontractors, verify their workers' compensation coverage to avoid liability.

Operational Steps Before Hiring

• Obtain Coverage: Contact an authorized insurance provider in South Carolina to purchase workers' compensation insurance before onboarding employees.
• Register Your Policy: Ensure your policy is registered with the South Carolina Workers' Compensation Commission as required.
• Maintain Records: Keep detailed records of insurance coverage and employee information for compliance and reporting purposes.
• Employee Classification: Classify employees correctly to determine appropriate coverage and premium rates.

Additional Considerations

As of 2026, failure to obtain workers' compensation insurance when required can lead to penalties, fines, and potential lawsuits. Integrating insurance procurement into your hiring process ensures compliance and smooth onboarding.

Also, coordinate workers' compensation insurance with your payroll and bookkeeping systems to streamline premium calculations and reporting.