Many people often misunderstand how workers’ compensation works. While the state has some involvement in the system, it really is private. Workers’ compensation is insurance your employer purchases. The state only regulates who must carry the insurance, much as it does with auto insurance.
If an employer does not carry the insurance when mandated by the law, it can face consequences, including fines and potential shut down. According to the Industrial Commission of Arizona, all employers who have employees must carry workers’ compensation insurance.
There are not many exceptions to the law about carrying workers’ compensation insurance. Any employer that wants to opt-out will have to go through the Arizona Department of Insurance to receive permission to do so. The main exceptions are for employers who hire only domestic servants or independent contractors as these two categories of workers are not included by the state for mandatory workers’ compensation coverage. Self-employed individuals may also have the option to not carry this insurance.
Your employer should have postings telling you that it has workers’ compensation. Your employer must make you aware of the coverage and give you the chance to opt-out. Opting out means that if you do suffer an injury, then you cannot make a workers’ compensation claim, and you would have to take your employer to court to get any payments.
In general, your employer will carry this insurance to save it from having to go to court over on-the-job injuries. It is a no-fault system, which means you are immediately entitled to get benefits once you file a claim, but that you cannot sue your employer.