Monopolistic Workers' Comp States: What Multi-State Employers Must Do Differently

Most multi-state employers buy one workers' compensation policy, list the states where they have employees, and let the carrier handle the rest. That approach works in 46 states. In four, it does not. North Dakota, Ohio, Washington and Wyoming are monopolistic states: workers' comp coverage for employees working there must come from the state's own fund, and a private carrier's policy cannot provide it.

The gap usually shows up the hard way. A company hires a remote employee in Ohio or sends a crew to a job in Washington, assumes the national policy follows them, and finds out after an injury that it never did. This guide explains how monopolistic funds work, why the standard policy stops at their borders, and what HR needs to set up before the first employee works there. For a broader refresher on coverage obligations, see our overview of workers' comp insurance requirements.

What a Monopolistic State Fund Is

In most states, employers choose how to meet the workers' comp mandate: buy from a private insurer, buy from a competitive state fund where one exists, or self-insure if they qualify. A monopolistic state fund removes the private-insurer option. The state agency is the only source of workers' comp insurance for employers in that state, and it sets the rates, collects the premium and administers the claims.

Each of the four runs its system through a state agency:

Ohio and Washington also allow qualifying employers to self-insure under state-approved programs. Otherwise, the state fund is the insurer.

The Four Monopolistic States

North Dakota. Employers with North Dakota employees obtain coverage from WSI and report payroll and pay premium through WSI's employer portal. WSI sets the reporting period and due date on each employer's account.

Ohio. BWC covers private and public employers. Private employers are billed prospectively: BWC estimates premium for the policy year that runs July 1 through June 30, based on the most recent actual payroll, and the employer pays in installments. After the policy year ends, the employer files a true-up reporting actual payroll, and BWC either bills the difference or issues a credit. BWC has said that missing the true-up can remove an employer from its discount and rebate programs.

Washington. L&I is the insurer for most Washington employers. Washington is unusual in two ways: premiums are calculated on hours worked, not payroll dollars, and employers may deduct a portion of the premium from employees' wages, up to the employee rate published on the employer's rate notice. Reports and premium are due quarterly.

Wyoming. Coverage comes from the Workers' Compensation Division of the Department of Workforce Services. Wyoming combines workers' comp reporting with the quarterly unemployment insurance wage report, filed through the state's unemployment insurance portal.

Why a Private Policy Does Not Cover Employees There

The standard workers' compensation and employers' liability policy has three main parts:

• Part One, Workers' Compensation: pays the statutory benefits in the states listed on the declarations page.
• Part Two, Employers' Liability: defends and pays lawsuits by employees or others arising from a work injury that fall outside the workers' comp system.
• Part Three, Other States Insurance: extends coverage to additional states where work begins during the policy period.

In a monopolistic state, Part One cannot be written by a private insurer, and the "other states" extension does not reach those four states either. So a national policy that lists "all states except ND, OH, WA, WY" (common wording) means exactly that. Employees working in those states need a policy from that state's fund.

The practical consequence: an employer with an employee in a monopolistic state but no state fund account is uninsured there for workers' comp, with whatever penalties that state imposes on uninsured employers, plus direct exposure for the injured employee's benefits. Our article on what happens without workers' comp coverage walks through those consequences.

Employer's Liability Gap and Stop-Gap Coverage

Here is the part many employers miss even after they open a state fund account. The state fund provides the workers' comp benefits (the Part One equivalent). It generally does not provide employer's liability coverage, the Part Two protection that a standard private policy includes.

Employer's liability responds to claims such as:

• A lawsuit alleging the employer acted with intent to injure (where state law allows such suits outside the comp system)
• A third-party-over action, where an injured worker sues a third party (an equipment maker, a property owner) and that party sues the employer for contribution
• Claims by an injured employee's spouse or family members for their own losses, where state law permits them
• Claims for injuries that fall outside the workers' comp statute

To fill the gap, employers buy stop-gap coverage, which is employer's liability insurance for monopolistic states. It is sold by private insurers, usually in one of two ways:

1. As an endorsement to the workers' comp policy that covers your other states, adding employer's liability for the monopolistic states where you have employees.
2. As an endorsement to a general liability policy, common for employers whose only operations are in a monopolistic state.

How to check whether you have it: look at the workers' comp declarations for an employer's liability section that names the monopolistic states, or for a stop-gap endorsement. Then check the general liability declarations for the same. If you have employees in a monopolistic state and neither policy shows it, ask your broker. Terms and availability vary by insurer, and the state fund itself can tell you exactly what its policy covers.

Remote and Traveling Employees in Monopolistic States

Workers' comp coverage generally follows where the employee works, not where the company is headquartered. That makes remote hiring the most common way employers land in a monopolistic state without realizing it. Our article on coverage for remote workers covers the general rules; the monopolistic-state version adds steps.

Fully remote employee living in a monopolistic state. Open an account with the state fund before the employee starts, report that employee's payroll or hours to the fund, and exclude them from the private policy's payroll. Add stop-gap coverage for that state.

Employees who travel into a monopolistic state. Each state has its own rules on when out-of-state employers must buy coverage there, often based on how long or how regularly the employee works in the state, and some states have reciprocity arrangements with neighboring states. Washington, for example, publishes out-of-state coverage rules for workers temporarily working there. Check the specific state fund's rules before a project starts, not after.

Employees based in a monopolistic state who travel out. The reverse problem: a state fund policy may not fully cover employees while they work in other states. Ask your broker whether your private policy needs to cover those employees for out-of-state work.

A practical control: add a work-state check to your onboarding and travel approval workflows. When payroll sets up an employee with a work address in ND, OH, WA or WY, it should trigger a notice to whoever manages workers' comp. The same applies when a project manager schedules work in those states.

Reporting, Premiums and Claims Through the State Fund

Once you have a state fund account, the mechanics differ from a private policy in a few important ways.

Premium reporting

Washington requires a quarterly report even for a quarter in which nobody worked, showing zero hours. Treat each fund's deadlines as payroll compliance deadlines, because a missed report can cost you discounts, trigger penalties or, in some cases, put coverage at risk.

Rates and classifications

Each fund sets its own rates and classification codes. They do not necessarily match the codes on your private policy, so the same job may be classified differently in Ohio than in Indiana. Each fund also has its own experience-rating and discount programs. If your organization tracks workers' comp costs centrally, keep the state fund premiums in the same report so you see the whole picture.

Claims

Injuries are reported to the state fund, not to your private carrier, using the fund's own forms and online systems. The fund administers the claim: it decides compensability and pays benefits. Your role is the same as anywhere else: report promptly, provide wage and job information, support return to work and keep records. Make sure supervisors and HR know which reporting channel applies to employees in each state, because a first report sent to the wrong insurer delays the claim. Our guide to filing a workers' comp claim covers the employer side of the process.

A Monopolistic-State Checklist for HR

• List every employee whose primary work location is ND, OH, WA or WY.
• Confirm an active account with each relevant state fund.
• Confirm stop-gap employer's liability coverage for each of those states.
• Confirm the private policy excludes those states' payroll so you are not paying twice.
• Calendar each fund's reporting and true-up deadlines.
• Add a work-state trigger to onboarding, transfers and project scheduling.
• Give supervisors in those states the fund's claim-reporting instructions.
• Review the setup at each policy renewal and whenever a new remote hire is made.

Build Multi-State Workers' Comp Skills

Multi-state employers need someone who understands both the private-policy world and the state fund world, and who can spot a coverage gap before it becomes an uninsured claim. Our workers' comp training for HR covers the fundamentals, and the Workers' Compensation Training & Certification program goes further: reporting injuries, the claims process, how premiums are determined, return to work and recordkeeping, in a self-paced online course with an optional exam for the Certified Workers' Compensation Administrator credential.

Frequently Asked Questions

What are the monopolistic states for workers' comp?

There are four: North Dakota, Ohio, Washington and Wyoming. In these states, employers must obtain workers' comp coverage from the state-run fund rather than a private insurer. Ohio and Washington also allow qualifying employers to self-insure. Every other state allows private insurance, and some also have a competitive state fund that sells coverage alongside private carriers.

Can I buy private workers' comp insurance in Ohio or Washington?

Not for the statutory workers' comp benefits. In monopolistic states, the state fund is the only insurer for that coverage, apart from qualifying self-insured employers. You can, and usually should, buy private stop-gap coverage for employer's liability, because the state fund policy generally does not include it. A national policy from a private carrier will typically exclude the four monopolistic states.

What is stop gap coverage?

Stop-gap coverage is employer's liability insurance for employees in monopolistic states. It covers lawsuits arising from work injuries that fall outside the workers' comp system, such as third-party-over actions or certain claims by family members, where state law allows them. It is usually added by endorsement to a workers' comp policy covering your other states or to a general liability policy. Your broker can confirm limits and terms.

Do I need a state fund policy for one remote employee?

Generally, yes. Workers' comp coverage follows where the employee works. If an employee works from home in North Dakota, Ohio, Washington or Wyoming, you need an account with that state's fund for that employee, plus stop-gap coverage. Contact the fund before the employee's start date. Waiting until after an injury leaves the employer uninsured in that state.

How are premiums calculated in monopolistic states?

Each fund uses its own classifications and rates. Ohio estimates premium for a July 1 to June 30 policy year from recent payroll and reconciles it with a true-up of actual payroll. Washington charges premium based on hours worked, reported quarterly, and lets employers deduct an employee share. Wyoming collects premium through quarterly reports. North Dakota bills from payroll reported to WSI. Experience-rating and discount programs also vary by state.

Who handles a claim for an employee injured in a monopolistic state?

The state fund. You report the injury to the fund using its forms or online system, and the fund decides compensability and pays benefits. Do not send the report to your private carrier for that employee. The employer's role is the same as elsewhere: prompt reporting, accurate wage and job information, support for return to work, and good records.