ARIZONA WORKERS’ COMPENSATION INSURANCE
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Introduction
Arizona workers’ compensation insurance is a legal mandate for companies with one or more employees. This protection helps both workers and business owners by making sure employees hurt at work get medical treatment and pay replacement, while guarding businesses from costly lawsuits.
This guide offers a thorough breakdown of Arizona workers’ compensation rules, exceptions, fines, and what employers must do, based on the official Arizona Industrial Commission (ICA) guidelines.
WHO NEEDS WORKERS’ COMPENSATION INSURANCE IN ARIZONA?
Under Arizona workers’ compensation law (A.R.S. § 23-901), employers must provide coverage for all employees. Unlike some states that set a minimum employee threshold, Arizona requires coverage even if only one worker is employed—regardless of their employment status.
Arizona law explicitly includes the following types of workers under mandatory coverage:
Full-Time, Part-Time, Seasonal, and Temporary Workers
- Full-time employees: Regular staff who work 30+ hours each week.
- Part-time employees: People who work fewer hours but still have employee status.
- Seasonal workers: Staff hired for specific times, like store clerks during holidays or farm help at harvest.
- Temporary workers: Short-term staff who fill in for regular employees or help during busy times.
Minors, Aliens, and Family Members
- Minors (under 18): Employers must cover employees, whether they work full-time or part-time.
- Undocumented Workers: Arizona law mandates workers’ comp coverage for all workers, no matter their legal immigration status.
- Family Members: When a business employs a spouse, sibling, or child, they get the same coverage as other employees unless Arizona law exempts them.
Construction Workers (Special Consideration)
Arizona enforces tough laws for the construction industry to stop misclassification.
- General contractors need to check that subcontractors have workers’ comp insurance.
- When a subcontractor lacks insurance, the general contractor has to provide coverage.
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WORKERS’ COMPENSATION EXEMPTIONS IN ARIZONA
Certain individuals may be exempt from workers’ compensation coverage:
| Worker Type | Coverage Requirement |
|---|---|
| Sole Proprietors & Business Partners | Not required, but can opt in voluntarily. |
| Corporate Officers & LLC Members | Exempt if owning 50% or more of the company. |
| Independent Contractors | Not covered, unless misclassified as an employee. |
| Casual or Domestic Workers | Exempt if working on a minor, non-business-related task. |
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ARIZONA WORKERS’ COMPENSATION BENEFITS
Arizona workers’ compensation gives medical care, wage replacement, and financial support to injured employees. The Industrial Commission of Arizona (ICA) manages claims, and coverage must come from private insurers or self-insurance programs as Arizona has no state fund.
Medical Benefits
- Covers doctor visits, hospital stays, prescriptions, and rehabilitation.
- Employees need to see an approved provider, except in emergencies.
- Employers can’t control long-term medical treatment.
- Undocumented workers get full medical benefits.
Death Benefits
- Up to $5,000 to cover funeral costs.
- Ongoing money support for dependents, based on how much the worker earned.
- Learning benefits for surviving spouses.
Arizona-specific: Death benefits are for legal dependents, and how long they last depends on the relationship.
Wage Replacement Benefits
- TTD (Temporary Total Disability) – 66 2/3% of wages, with a limit of $5,030.79/month (2024).
- TPD (Temporary Partial Disability) – Pays for some lost wages when working with limitations.
- PPD (Permanent Partial Disability) – Depends on how bad the injury is.
- PTD (Permanent Total Disability) – Benefits for life for those who can’t work again.
Arizona-specific: The wage limit changes every year.
EMPLOYER RESPONSIBILITIES UNDER ARIZONA WORKERS’ COMPENSATION LAW
Employers must comply with Arizona Industrial Commission (ICA) regulations, including:
| Responsibility | Requirement |
|---|---|
| Maintain Active Coverage | Arizona requires workers’ compensation for eligible employees. |
| Post Coverage Notice | Employers must display a workers’ compensation coverage notice in the workplace. |
| Report Injuries | File a First Report of Injury (FROI) within 10 days of a workplace accident. |
| Provide Medical Treatment | Ensure employees receive care from an approved medical provider. |
| Keep Payroll & Classification Accurate | Misclassifying workers can result in penalties during audits. |
PENALTIES FOR NON-COMPLIANCE IN ARIZONA
Employers in Arizona must carry workers’ compensation insurance for all employees. Failure to comply can result in severe financial, legal, and operational consequences, including criminal charges, fines, and business closure. The Industrial Commission of Arizona (ICA) enforces these penalties and actively investigates non-compliant businesses.
| Violation | Arizona-Specific Penalty |
|---|---|
| Operating Without Insurance | $1,000 per employee per day for first offense. Subsequent violations: $5,000 – $10,000. |
| Failure to Report an Injury | Employer is liable for all medical expenses, plus a 10% penalty or $1,000 fine (whichever is greater). |
| Employee Misclassification | Fines, back pay of premiums, and potential civil lawsuits. |
| Criminal Charges | Class 6 felony for repeated non-compliance. |
| Stop-Work Orders | ICA can shut down a business until proper insurance is obtained. |
| Employee Lawsuits | Employees can sue for workplace injuries if the employer is uninsured. |
WORKERS’ COMPENSATION PREMIUM RATES IN ARIZONA
| Industry | Estimated Premium Rate per $100 of Payroll |
|---|---|
| Tourism and Hospitality | $2.00 – $3.50 |
| Agriculture | $3.00 – $5.00 |
| General Contractors | $8.00 – $15.00 |
| Electricians | $3.50 – $6.00 |
| Plumbing Contractors | $4.50 – $8.00 |
| HVAC Technicians | $5.00 – $9.00 |
| Roofing Contractors | $25.00 – $50.00 |
| Concrete & Masonry Work | $8.00 – $14.00 |
| Painting Contractors | $5.00 – $10.00 |
| Framing & Carpentry | $10.00 – $18.00 |
Workers’ comp insurance premiums in Arizona change based on industry risks. Here are some sample premium rates for every $100 of payroll in major Arizona industries.
These rates are rough estimates and can change depending on things like what employees do how many claims a company has made before, and how the insurer judges risk. For example, in healthcare, office workers might have lower rates than doctors because they face different risks.
Keep in mind that Arizona has seen workers’ comp rates go down. Starting January 1, 2024, rates dropped by 10.3%, which marks ten years in a row of lower rates.
To get the most precise and current premium rates that fit your particular business, you should talk to a licensed insurance provider or check with the Arizona Department of Insurance and Financial Institutions.
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Frequently Asked Questions
The following are common questions about Workers’ Compensation Insurance
All employers with one or more employees must provide workers’ compensation insurance, including full-time, part-time, and seasonal workers.
No, but if an uninsured subcontractor is injured, the hiring company may be liable for coverage.
Premiums depend on industry risk, payroll, and claim history, ranging from $0.75 to $50 per $100 of payroll.
Arizona fines $1,000 per employee per day for non-compliance, plus business shutdowns and felony charges for repeat offenders.
Yes. Employers can reduce costs by improving workplace safety, enforcing drug-free programs, and keeping a low claim history.
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