Workers’ compensation coverage is insurance that employers must purchase. Many people mistakenly think it is a type of government benefit. The government does regulate the system for benefits, but it does not directly provide the payments. 

Mass.gov explains the state sets requirements for employers and workers’ compensation insurance coverage. If an employer fails to obtain insurance and keep it valid, it could face fines and, potentially, a shut-down of operations. 

Employers that must have coverage 

Unlike many other states, Massachusetts law requires all employers to carry workers’ compensation insurance. The requirement extends to companies from out of state operating within the state. However, there are a few exceptions. 

Domestic employees who do not work 16 hours or more per week do not require coverage. 

An exception also exists for sole proprietors in an unincorporated business, limited liability partners and members of a limited liability company. Although the law does not require these individuals to carry coverage on themselves, they must carry it on employees. 

In addition, corporate officers may file for an exemption for themselves if they own at least 25% of the corporation. 

Penalties for not having coverage 

The Department of Industrial Accidents will issue a company a stop work order upon discovering the lack of insurance coverage. The SWO not only shuts down the company but also prevents it from becoming a party to public contracts for three years. 

Under the SWO, an employer accrues a $100 fine against it for every day that the company has no coverage. In addition, the fine continues until the company pays the fine in full even if it acquires insurance coverage. It may also face criminal charges, including additional fines and jail time. 

An employer may appeal the SWO, but this only allows the business to stay open. The fine still applies, but it increases to $250 per day.