Published by Prominent Insurance Services on February 1, 2026 in Workers' Compensation.
Maryland requires workers' compensation for all employers. Learn the requirements, penalties for non-compliance, costs, and how to find affordable workers' comp coverage.
Maryland has some of the most straightforward workers' compensation requirements in the Mid-Atlantic region. Every employer in the state — with very limited exceptions — must carry workers' compensation insurance for their employees. This guide explains who needs coverage, what it costs, and how to find the right policy for your Maryland business.
Maryland law requires workers' compensation insurance for virtually all employers. Unlike some states that exempt very small businesses, Maryland requires coverage regardless of the number of employees. If you have one employee — whether full-time, part-time, or seasonal — you need workers' compensation insurance in Maryland.
The Maryland Workers' Compensation Commission (WCC) oversees the state's workers' comp system. The WCC processes claims, resolves disputes, and enforces compliance with the coverage requirement.
Limited exceptions exist for:
The distinction between employees and independent contractors is critical in Maryland. If a worker is found to be an employee rather than an independent contractor, the employer is liable for workers' compensation benefits and may face penalties for failing to carry coverage. Maryland uses a multi-factor test to determine worker classification, considering factors like the degree of control the employer exercises, whether the worker provides their own tools, and the permanence of the relationship.
Operating without workers' compensation insurance in Maryland carries severe penalties:
Civil penalties of up to $10,000 per violation. Each day without coverage can be considered a separate violation.
Criminal penalties including misdemeanor charges for willful failure to insure, which can result in fines and even imprisonment.
Personal liability for the employer. If an uninsured employee is injured on the job, the employer is personally responsible for all workers' compensation benefits, including medical expenses, lost wages, and permanent disability benefits. These costs can be catastrophic for a small business.
Stop-work orders can be issued by the WCC, requiring the business to cease all operations until proper coverage is obtained.
Workers' compensation insurance in Maryland provides benefits to employees who are injured or become ill as a result of their employment. Covered benefits include:
Medical expenses related to the work injury or illness, including doctor visits, surgery, hospitalization, medication, physical therapy, and medical equipment. There is no deductible or copay for the injured worker.
Temporary total disability benefits, which replace a portion of the employee's lost wages while they are unable to work. In Maryland, temporary total disability pays two-thirds of the employee's average weekly wage, up to the state's maximum weekly benefit rate.
Permanent partial disability benefits for employees who recover but have a lasting impairment. The amount depends on the body part affected and the degree of impairment.
Permanent total disability benefits for employees who are permanently unable to work in any capacity as a result of their injury.
Death benefits paid to the dependents of an employee who dies as a result of a work-related injury or illness, including funeral expenses up to $7,000.
Vocational rehabilitation services to help injured employees return to work, including retraining and job placement assistance.
Workers' compensation premiums in Maryland are calculated based on three primary factors:
Classification code. Every job function is assigned a classification code that reflects the risk level of that type of work. Office workers have low-risk codes with correspondingly low rates, while construction workers, roofers, and other high-risk occupations have much higher rates. The National Council on Compensation Insurance (NCCI) develops these classification codes, and Maryland follows the NCCI system.
Payroll. Your premium is calculated as a rate per $100 of payroll for each classification code. If your office workers' rate is $0.30 per $100 and your total office payroll is $200,000, the base premium for that class code would be $600.
Experience modification rate (EMR). Your EMR compares your company's actual claims history to the expected claims for businesses of your size and industry. An EMR of 1.00 means your claims experience is average. An EMR below 1.00 means you have fewer claims than average and will receive a premium credit. An EMR above 1.00 means you have more claims than average and will pay a surcharge. Your EMR is the single most controllable factor in your workers' comp premium.
Implement a safety program. The most effective way to reduce your workers' comp costs is to prevent injuries from occurring in the first place. Regular safety training, proper equipment maintenance, and clear safety procedures can significantly reduce your claim frequency and severity, which lowers your EMR over time.
Establish a return-to-work program. Getting injured employees back to work — even in a modified or light-duty capacity — reduces the duration and cost of claims. This directly improves your EMR and lowers future premiums.
Classify your employees correctly. Incorrect classification codes can result in significantly higher premiums. Make sure each employee is assigned to the classification code that most accurately reflects their job duties. A common mistake is classifying all employees under the highest-risk code when some workers perform lower-risk duties.
Shop your policy with an independent agency. Workers' compensation rates and underwriting criteria vary between carriers. An independent agency like Prominent Insurance Services compares proposals from multiple carriers to find the most competitive rate for your specific industry and claims history.
Review your annual audit carefully. Workers' compensation policies are subject to annual premium audits that reconcile your estimated payroll with actual payroll. Review the audit carefully to ensure your payroll figures and classification codes are accurate. Errors in the audit can result in overpayment.
Prominent Insurance Services helps Maryland employers find affordable workers' compensation coverage that meets state requirements. We work with carriers experienced in Maryland's workers' comp market and help businesses manage their EMR to reduce long-term costs. Whether you are a contractor with a crew of 50 or a small office with 3 employees, we build a workers' comp program that fits your business. Call us at 302-351-3368 or schedule a strategy session.