Does Illinois require workers’ compensation insurance?
Yes. Illinois requires workers' compensation from the first employee, even a part-time one, according to the Illinois Workers' Compensation Commission. 820 ILCS 305/3 applies the Act automatically to almost every kind of business, with narrow carve-outs for small farms and part-time household help. Sole proprietors, partners, LLC members, and bona fide corporate officers can opt themselves out, and Illinois has no state waiver form for doing so.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
How many employees before Illinois requires workers' comp?
One employee is enough, full-time or part-time, and coverage starts the moment the person is hired, with no waiting period. 820 ILCS 305/3 lists the businesses the Act covers automatically, from construction, trucking, and manufacturing to restaurants and salons, plus any business selling goods or services to the public once its prior-year payroll tops $1,000.
The carve-outs are narrow. A farm is outside the Act if it used fewer than 400 working days of agricultural labor per quarter in the prior calendar year, not counting the owner's spouse and resident family, and a household is outside it unless it employs domestic workers 40 or more hours a week for 13 or more weeks a year.
Source: Illinois Workers' Compensation Commission, Insurance, checked .
Which owners, officers, and family members are exempt in Illinois?
Under 820 ILCS 305/3(20), a sole proprietor, partner, or LLC member can choose not to cover themselves. Under 305/3(17)(b), a bona fide president, vice president, secretary, or treasurer of a corporation can withdraw from the Act by giving written notice to the insurance carrier, effective when the carrier receives it,. Paid family members are employees unless they are officers or farm workers under the agricultural carve-out.
Construction and trucking deserve care. The Department of Insurance tells employers in extra-hazardous work such as construction and trucking that they must carry workers' compensation, and the Commission points construction owners to the Employee Classification Act, 820 ILCS 185, which treats most workers on a construction job as employees. Check with the Compliance Division before relying on an owner opt-out there.
Source: 820 ILCS 305/3, checked .
What happens to a Illinois employer with no workers' comp?
After a hearing, the Commission can fine an employer that knowingly and willfully fails to insure up to $500 a day, with a $10,000 minimum; a second violation doubles that to $1,000 a day and a $20,000 minimum (820 ILCS 305/4(d)). The Commission can also serve a work-stop order that halts all operations until proof of insurance is filed. An individual employer, or a corporate officer, director, partner, or LLC member, who negligently fails to insure commits a Class A misdemeanor; knowingly failing is a Class 4 felony, each day a separate offense.
A Department of Insurance investigator can also write a citation of $500 to $10,000, and the employer then has 10 days to pay it and show proof of coverage. A knowingly uninsured employer can also be sued in civil court by an injured worker.
Source: 820 ILCS 305/4(d), checked .
Who enforces workers' comp in Illinois?
Two agencies share the job. The Commission administers the Act, assesses the fines, and issues work-stop orders. The Illinois Department of Insurance's Workers' Compensation Compliance Division investigates reports of uninsured employers and works with the Attorney General to bring cases before the Commission and in criminal court.
Source: Illinois Department of Insurance, Workers' Compensation Compliance, checked .
Where do Illinois employers buy coverage?
Illinois is a private-market state with no state fund. Employers buy from a private carrier through a licensed agent, or qualify with the Commission to self-insure. An employer no carrier will write goes to the Illinois assigned risk plan, the market of last resort, which NCCI administers; the Commission notes premiums there run about 50% above the open market.
Source: Illinois Workers' Compensation Commission, Insurance, checked .
Who sets the class codes and rates in Illinois?
Illinois is an NCCI state. The National Council on Compensation Insurance, a private organization, publishes advisory rates and runs the policy database the Commission's coverage search uses, but Illinois has let each insurer set its own rates since 1983, so the same class and payroll can price differently from one carrier to the next.
Source: Illinois Workers' Compensation Commission, Insurance, checked .
Is there an exemption or waiver form in Illinois?
No. Illinois has no state exemption certificate or coverage waiver. The Commission says it has no opt-out form and does not require one. A sole proprietor, partner, or LLC member with no employees simply does not buy coverage for themselves; a corporate officer who wants out while the company insures other employees sends written notice to the carrier. The Commission's online coverage search shows who has a policy.
Source: Illinois Workers' Compensation Commission, Insurance, checked .
Sorting out Illinois workers' comp for your business
Tell Redoubt what the business does, who works in it, and what the Illinois requirement in front of you says. We will say whether a policy, a waiver, or an exclusion fits.
This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.
Workers’ comp requirements in every state
Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.
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The hub, and the Illinois pages that go deeper
Illinois workers’ comp FAQ
Do I need workers' comp in Illinois with one part-time employee?+
Yes. The Commission says one employee, even part-time, requires a policy from the day of hire.
Can an Illinois LLC owner or corporate officer skip workers' comp?+
Usually, for themselves. LLC members, sole proprietors, and partners can elect not to be covered under 820 ILCS 305/3(20), and a bona fide president, vice president, secretary, or treasurer can withdraw by written notice to the carrier. Every other employee still has to be insured, and construction and trucking owners should confirm with the Department of Insurance first.
Is there an Illinois workers' comp waiver or exemption certificate?+
No. The Commission has no opt-out form and does not issue a waiver. If a general contractor or client asks for proof that you are exempt, ask exactly what they will accept, because no state document shows that an owner opted out.
Does an out-of-state company working in Illinois need Illinois coverage?+
Yes, if its employees do any work in Illinois. The Commission says the policy has to list Illinois for those workers, even when they live elsewhere.
Do my 1099 subcontractors count as employees in Illinois?+
Sometimes. A 1099 label does not settle it: the Commission points to the Employee Classification Act for construction and to an Illinois Supreme Court decision holding a leased trucker was still owed coverage. Under 820 ILCS 305/1(a)(3), a contractor is also liable for an uninsured sub's injured workers on its job site, so collect a certificate before the sub starts.