Workers' comp laws in Maryland
Maryland requires workers' compensationWorkers' Compensation Insurance that pays medical bills and lost wages when an employee is hurt or sick because of work. Insurers call it workers' compensation. more →, the insurance that pays injured employees' medical bills and lost wages, from your first covered employee, and the Maryland Workers' Compensation Commission runs it. Corporate officers are covered unless they opt out; sole proprietors and partners are out unless they opt in. The other seven states are on the state index.
- Maryland sets no headcount or payroll threshold.
- Officers opt out on Form IC-16; sole proprietors and partners opt in on Form C-15R.
- The Commission can order an uninsured employer to pay up to $25,000 more than once.
Do I have to carry workers' comp in Maryland?
Yes, from your first covered employee. Maryland sets no minimum headcount or payroll. (Source: Maryland Code §9-201)
A farm worker is covered only when the farmer has 3 full-time employees or $15,000 of full-time payroll. (Source: Maryland Code §9-210)
A food manufacturer meets that line only with a real farm arm. There, an officer of a corporation earning 75% of its income from farming, who owns 20% of the stock, may opt out. (Source: Maryland Code §9-206)
A repair worker hired for up to 30 consecutive work days is exempt at a business only if it has no other covered employees. A commercial property owner with one maintenance worker is therefore in from day one. (Source: Maryland Code §9-214)
Who counts as my employee in Maryland?
Anyone working for you under a contract of hire is presumed to be a covered employee, and you must prove otherwise. Officers are covered when paid but can opt out; sole proprietors and partners are out unless they opt in. (Source: Maryland Code §9-202) See the first-hire guide.
Any officer of a close corporation (one with few owners) can opt out, as can up to five officers of other corporations. They file Form IC-16 through the Commission's CompHub portal. (Source: Commission Form IC-16) A restaurant run as a small corporation can opt out its owner-chef this way. A sole-proprietor owner stays out unless Form C-15R puts them in. (Source: Maryland Code §9-227)
A commercial fleet's truck owner-operator is not its employee only under a written lease with a motor carrier. That covers Class F tractors and Class E trucks, not Class T. (Source: Maryland Code §9-218)
Knowing misclassification can bring a penalty of up to $5,000, and advising an employer to do it up to $20,000. An e-commerce seller with gig delivery drivers faces that risk. Remote staff working wholly outside Maryland fall under their own state's law. (Source: Maryland Code §9-402.1)
What goes in payroll?
Wages, bonuses, commissions, paid time off and the straight-time part of overtime go in; tips and the extra half of overtime pay stay out. The state fund's 2026 audit guide sets this out and says it follows NCCI. (Source: Chesapeake Employers audit guide)
A hotel's housekeeping wages count; guest tips do not. A night auditor's overtime counts at straight time if you record overtime separately.
After the year ends, the insurer checks your real figures in a yearly payroll check, which insurers call a premium audit; see the audit guide. For an uninsured subcontractor, the insurer charges premium on what you paid: at least 50% of a labor-and-materials contract, 100% of a labor-only one, and 100% with no contract. (Source: Chesapeake Employers audit guide)
| What happens | Amount |
|---|---|
| You give a job to a contractor with no workers' comp, priced at | $60,000 |
| The insurer counts at least this share of a labor-and-materials contract as your payroll | 50% |
| So your payroll rises by (50% × $60,000) | $30,000 |
| At an assumed $2.00 per $100 of payroll, you pay extra premium of ($30,000 ÷ $100 × $2.00) | $600 |
| Had the contractor shown its own policy, you would pay | $0 |
Illustration only, with round numbers. It is not a statement of what any policy charges; your own policy wording governs.
Who sets the rate in Maryland?
NCCI, the rating bureau, sets the job classes, and a 2008 state fiscal note called it the only one operating in Maryland. (Source: Maryland fiscal note, 2008) The state fund, Chesapeake Employers' Insurance Company, takes any employer that applies.
Chesapeake is a nonprofit. (Source: Maryland Manual) A grocery store that standard insurers decline can still apply. Chesapeake announced a 4% rate cut from 1 April 2026, pending state approval. (Source: Chesapeake Employers, 3 March 2026)
Your claims record adjusts the price through the experience modification factorExperience Modification Factor (E-Mod) A number, with 1.0 as average, that raises or lowers your workers' compensation price based on your claims compared with similar businesses. Insurers call it the experience modification factor. more →, built from the latest 36 months. Chesapeake rates policies under $13,000 of premium by merit instead (2023 notice). (Source: Chesapeake Employers)
What about workers in other states?
A worker regularly employed in Maryland stays under Maryland law elsewhere only on a casual, incidental or occasional basis. One employed wholly outside Maryland is not covered by it. (Source: Maryland Code §9-203) The new-state guide has more.
A visiting worker is exempt only if five conditions hold, such as a hire made in another state and a home-state policy that reaches Maryland work. (Source: Maryland Code §9-203(b))
The state fund's policy reimburses other-state claims only for temporary work and does not satisfy another state's law; regular cover comes through a partner insurer. A wholesaler, distributor or importer with drivers beyond Maryland should check. (Source: Chesapeake Employers handbook, 2024)
What happens if I don't carry it?
The Commission can order you to buy coverage and to pay up to $25,000. If you ignore the order for 30 days, it can order up to $25,000 more. (Source: Maryland Code §9-407)
The cap rose from $10,000 on 1 July 2024. (Source: Maryland Workers' Compensation Commission) The penalty is a lien on your assets. Officers or members with general management duties in Maryland can be jointly liable if they knowingly failed to insure, which matters for a restaurant depot run as a corporation.
Failing to secure coverage is also a misdemeanor, with a fine up to $5,000, a year in prison, or both. (Source: Maryland Code §9-1107) An injured employee may claim or sue, and you cannot argue the worker accepted the risk, shared the fault or was hurt by a coworker. (Source: Maryland Code §9-509)
The Commission's Employer Coverage Verification lookup shows who has a policy; no result does not prove a lack of insurance.
Frequently asked questions about workers' comp in Maryland
A household worker is covered once the household pays them $1,000 or more in cash in a calendar quarter. Below that, coverage applies only if the household and the Commission elect it.
A certificate from the home state's workers' comp agency counts as proof unless someone challenges it. The worker must still meet all five conditions.
Yes, if the business has no covered employees besides them. It can apply for a Certificate of Compliance on Form IC-13. Sole proprietors and partners get a letter of exemption instead.
Not sure which Maryland rule you fall under?
Tell us who works for you and how they are paid, and we will help you work out which of these rules to ask the Commission about.