What happens if a company fails to carry workers' compensation insurance as required by state law?

When a company fails to carry workers' compensation insurance as mandated by state law, it typically waives certain common law defenses when faced with lawsuits from employees injured on the job. This means that if an employer does not have the required coverage, they may not be able to use traditional defenses that would typically protect them in a workers' compensation case, such as arguing that the employee was negligent, that the injury was due to an inherent risk of the job, or that the employee was not acting in the course of employment at the time of the injury. As a result, the employer may face a higher degree of liability for any injuries sustained by employees, potentially resulting in greater financial ramifications and legal exposure.

In contrast, employers who carry the appropriate workers' compensation insurance are generally protected from certain lawsuits by their employees, as the system is designed to provide a no-fault solution to workplace injuries. Thus, the absence of insurance significantly impacts their legal standing and potential defenses in court. This makes the consequences of failing to obtain the required coverage quite serious and underscores the importance of compliance with workers' compensation regulations.