Do I need workers comp?
The states that differ
Everywhere not listed here requires cover from employee number 1. These are the exceptions, and each one was checked individually rather than copied from a table.
Texas is on its own
It is the only state where a private employer can opt out of the workers comp system entirely. What that also removes is the legal shield the system provides, so an injured employee can sue you for negligence instead of being limited to a workers comp claim. Plenty of Texas employers carry it anyway for that reason alone.
| Required from | States | Worth knowing |
|---|---|---|
| 5 employees | Alabama, Mississippi, Missouri, Tennessee | In Missouri, construction is 1 employee. In Tennessee, construction is 1 employee. |
| 4 employees | Florida, South Carolina | In Florida, construction is 1 employee. |
| 3 employees | Arkansas, Georgia, New Mexico, North Carolina, Wisconsin | In Georgia, part-time workers count toward the three. In New Mexico, construction is 1 employee. |
| 2 employees | Virginia | No general exception noted. |
| Optional | Texas | Opting out removes your protection from being sued directly. |
| 1 employee | Every other state | The default. If your state is not named above, this is you. |
Construction changes the answer
Almost every state that sets a higher general threshold drops it to one employee for construction. If any part of what you do could be classed that way, and for handyman work that line is blurrier than people expect, assume one and get a quote.
Two things that catch people out
- Subcontractors can count. In many states an uninsured subcontractor becomes your responsibility, and their payroll gets added to yours at audit. Collect a certificate of insurance from every sub, every year.
- Owners are a separate question. Whether you count toward the threshold, and whether you are covered, are two different things and both depend on your structure and your state. Ask your agent rather than assuming.
The other policies you will end up carrying
Workers comp is the one the state cares about. These are the ones your customers care about, and commercial contracts routinely require them.
| Cover | Rough cost | What it is for |
|---|---|---|
| General liability | $500 to $1,200 a year Around $300 to $500 for a solo operator | Covers damage to a customer’s property and injuries to people who are not your staff. No state requires it, and almost every commercial contract does. |
| Janitorial or surety bond | $100 to $500 a year Same | Protects the customer against theft by your staff. Commercial cleaning contracts routinely require one. |
| Commercial auto | Varies widely Varies widely | Your personal policy will not cover a vehicle used for work. This is the gap people discover after an accident. |
All in, expect roughly $400 to $900 a year, mostly general liability. For a small crew, roughly $2,000 to $5,000 a year for a three to five person cleaning company, all policies combined.
Check before you rely on this
Thresholds move, and the details around owners, subcontractors and domestic or agricultural work vary more than the headline number suggests. Use this to know what to ask, then confirm with your state workers comp agency or an insurance agent licensed where you work.
Common questions
Do I need workers comp for one employee?
In most states yes, from the first employee. Thirteen states differ. Texas makes it optional entirely, Virginia starts at two, Arkansas, Georgia, New Mexico, North Carolina and Wisconsin at three, Florida and South Carolina at four, and Alabama, Mississippi, Missouri and Tennessee at five. Checked 28 August 2026.
Is workers comp really optional in Texas?
For private employers, yes, and Texas is the only state where that is true. What opting out also removes is the legal protection that comes with the system, so an injured employee can sue you directly for negligence, with none of the limits the workers comp system normally puts on that. Many Texas employers carry it anyway for exactly that reason.
Does my state threshold apply if I do construction work?
Usually not. Construction is almost always set at one employee even in states where the general threshold is three or five. If any part of what you do could be classed as construction, assume one.
What does workers comp actually cost?
It is priced per $100 of payroll and the rate depends heavily on the trade. Cleaning sits at the lower end, landscaping and painting toward the higher. On a $45,000 payroll a rate of $3 per $100 is about $1,350 a year. Get a real quote, because rates vary by state and claims history more than by anything else.
Do owners count toward the employee threshold?
It depends on your business structure and your state, and this is where people get caught out. Owners, officers and LLC members can often elect in or out, and whether they count toward the threshold is a separate question from whether they are covered. Ask your agent about your specific setup rather than assuming.