Workers Compensation Insurance Requirements in Maryland

Federal workers' compensation law does not exist; instead, each state administers its own workers' compensation system. The federal government requires federal contractors and employers in certain industries to maintain workers' compensation coverage as a condition of federal contracts and grants, but there is no uniform federal statute mandating all employers carry workers' compensation insurance.

The Longshore and Harbor Workers' Compensation Act (33 U.S.C. § 901 et seq.) covers maritime employees, and the Federal Employees' Compensation Act (5 U.S.C. § 8101 et seq.) covers federal civilian employees. These are exceptions to state-administered systems. For non-federal employers, workers' compensation is entirely a matter of state law, and no federal agency (such as the Department of Labor's OSHA) has authority to mandate coverage.

The purpose of workers' compensation systems is to provide injured workers with medical benefits and wage replacement without regard to fault, in exchange for limiting workers' rights to sue their employers in civil court. This trade-off is a core principle across all 50 states and the District of Columbia, though each state's specific requirements, coverage thresholds, and exemptions vary significantly.

Maryland Code, Labor and Employment Article § 9-202 requires every employer in the state to secure workers' compensation insurance coverage or qualify for self-insurance. This obligation applies to employers with one or more employees, making Maryland's threshold one of the lowest in the nation.

Under § 9-401, Maryland provides specific exemptions from this requirement. These include: (1) sole proprietors working alone in their own business; (2) partners in a partnership; (3) members of a limited liability company who work in the business; and (4) federally employed individuals covered under federal workers' compensation programs. Family members employed by a family business may also qualify for exemption, but only if they meet narrow criteria. Importantly, these exemptions are optional—eligible individuals and businesses may choose to obtain coverage voluntarily.

Maryland employers may satisfy the insurance requirement through three mechanisms: (1) purchasing a policy from a private insurance carrier licensed to write workers' compensation in Maryland; (2) obtaining coverage through the Maryland Workers' Compensation Commission's State Insurance Fund; or (3) becoming self-insured if the employer meets financial and operational requirements set by the Commission.

Maryland's law is broader in coverage than federal law because it applies to all private employers regardless of industry or contract status. The state also requires employers to maintain workers' compensation insurance throughout the year and to report coverage details to the Maryland Workers' Compensation Commission. If an employer allows coverage to lapse, even briefly, the employer remains liable for injuries that occur during that gap period as if fully uninsured.

Maryland employees have additional statutory rights under § 9-503, which prohibits employers from discharging or discriminating against employees for filing workers' compensation claims or exercising rights under workers' compensation law. This protection extends to employees who report unsafe conditions or injuries.

Maryland law carves out specific categories of workers and employers from the mandatory coverage requirement. Solo self-employed individuals working alone in their own business are exempt, but the moment they hire even one employee, the requirement kicks in. Partners in partnerships are similarly exempt, as are members of single-member or multi-member LLCs who actively work in the business. However, LLC members who are passive investors or do not perform work for the business are generally considered employees and must be covered.

Federally employed workers are exempt because they are covered by either the Federal Employees' Compensation Act or the Longshore and Harbor Workers' Compensation Act. Independent contractors are generally not considered employees under Maryland workers' compensation law, so employers are not required to cover them unless they are actually employees misclassified as contractors.

Family members employed by a family business may be exempt if they meet specific statutory criteria, though the definition is narrow and subject to scrutiny by the Commission. Religious organizations and charitable institutions may have limited exemptions in certain circumstances, but these are state-specific and must be verified with the Commission.

A critical exception is that if an employer fails to secure coverage, the lack of insurance does not eliminate the employer's liability for workplace injuries. Instead, the uninsured employer faces direct liability to the injured worker and substantial penalties from the state. This means non-compliance does not relieve the employer of the underlying obligation to pay workers' compensation benefits; it only exposes the employer to additional punitive consequences.

Employers cannot contract with employees to waive workers' compensation rights or coverage. Any agreement purporting to exempt an employee from workers' compensation coverage is void and unenforceable. This is true even if the employee signs a waiver voluntarily.

Step 1: Document the lack of coverage. Gather evidence showing the employer is operating without valid workers' compensation insurance. Obtain a copy of the injury incident report, medical records documenting workplace injury, wage stubs, and any written communications from the employer regarding insurance. Check the Maryland Workers' Compensation Commission's online database to verify whether the employer's name appears on the list of insureds or self-insured employers. Screenshot or save this verification. Keep records of all workers present on the date of injury and any witnesses to the incident.

Step 2: File an internal complaint with the employer, if safe to do so. Written communication (email or certified letter) requesting that the employer secure workers' compensation coverage for the injury is important for establishing notice and documenting the employer's response. Request a copy of the insurance policy or proof of self-insurance. If the employer refuses or cannot provide proof, document this refusal in writing. Do not delay this step waiting for resolution; proceed to Step 3 simultaneously if the injury is serious or medical care is urgent.

Step 3: File a complaint with the Maryland Workers' Compensation Commission. Contact the Commission's Uninsured Employers Fund at 410-864-7122 or visit www.mwcc.maryland.gov. The Uninsured Employers Fund specifically handles claims against employers without coverage. Complete the workers' compensation claim form (Form WCC/LIAB-1) and submit it directly to the Commission, not through the employer. Include the date of injury, description of the injury, the employer's business name and address, names of witnesses, and documentation of the lack of insurance coverage. The Commission will investigate the employer's coverage status. There is no filing fee, and you do not need an attorney to file, though you may choose to consult one before filing.

Step 4: Understand the investigation process. Once filed, the Commission will verify coverage status and contact the employer. The investigation typically takes 30 to 90 days depending on complexity. The Commission may issue a citation if the employer is confirmed uninsured. You will be notified of the investigation status. If the injury is serious and immediate medical care is needed, the Uninsured Employers Fund may authorize treatment on an emergency basis while the investigation proceeds. The injured worker will receive a case number and assigned investigator's contact information.

Step 5: Consult an attorney if you face resistance, a serious injury, or wage loss. An employment law attorney or workers' compensation attorney licensed in Maryland can represent you before the Commission at no upfront cost in many cases because prevailing workers' compensation claimants can recover attorney fees from the employer or insurer. An attorney can file appeals if the Commission denies your claim, ensure you receive all available remedies including permanent partial disability benefits if applicable, and protect you from employer retaliation under § 9-503.