Monopolistic workers comp state

Definition

Four US states operate monopolistic workers compensation systems: North Dakota (WSI), Ohio (BWC), Washington (L&I), and Wyoming (WCD). In these states, private insurance carriers cannot write workers comp coverage — employers must purchase from the state fund directly.

This materially changes PEO arrangements in monopolistic states. Most PEOs cannot include workers comp in their bundled offering in monopolistic states because they have no private carrier relationship to leverage. Some PEOs handle this by leaving workers comp at the state fund (you pay the fund directly) and administering everything else; others decline to take new clients in monopolistic states entirely.

If you operate in a monopolistic state, the question to ask every PEO during quoting is: "How do you handle workers comp in [state] — do you cover it, leave it at the state fund, or decline the engagement?"

Common questions about Monopolistic workers comp state

Related terms

• Workers compensation insurance — Insurance that pays medical expenses and lost wages for employees injured on the job, in exchange for limiting the employer's tort liability.
• Professional Employer Organization (PEO) — A company that enters into a co-employment relationship with a client business to handle payroll, benefits, workers comp, and HR compliance.

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