What could be a consequence of not having Workers Compensation in a compulsory state?

In a compulsory state, where Workers Compensation insurance is mandated by law, not having this coverage can lead to the denial of common law defenses in the event of claims. This means that if an employee is injured while working and the employer does not have the required Workers Compensation insurance, the employer may lose the ability to defend themselves against lawsuits that arise from workplace injuries or illnesses.

In many states, Workers Compensation provides exclusive remedies for employees, meaning they cannot sue their employer for workplace injuries if the employer is compliant with the Workers Compensation laws. However, if an employer is non-compliant and does not carry the necessary coverage, they may be held fully liable for injuries sustained by employees, losing protections that would ordinarily shield them under the law. Consequently, the employer could face litigation for damages, as they would not be able to invoke the defenses typically afforded by maintaining Workers Compensation insurance.

This highlights the crucial nature of adhering to compulsory Workers Compensation laws, not only for the protection of employees but also for safeguarding employers from potential legal repercussions.