Workers’ compensation insurance laws and requirements for employers vary from state to state, but private employers can generally choose whether to carry workers' compensation insurance coverage. A workers' compensation insurance policy provides lost wages and medical benefits to employees injured on the job—and death benefits for the spouse and dependents (children) of a worker who dies in a work-related accident.

Under workers’ compensation laws in many states employers who subscribe to workers’ compensation insurance receive a significant legal protection—they cannot be sued by an injured employee (or the estate of a deceased employee) unless the employer was grossly negligent (more negligent than simple, ordinary negligence).

In other words, if an employer has workers’ compensation insurance, that is usually the exclusive remedy for an injured employee (known as the exclusive remedy provision in the statute), and the insurance coverage bars an injured employee from suing the employer (known as the workers’ compensation bar).

An employer who does not purchase or subscribe to workers’ compensation insurance is known as a nonsubscriber. Workers’ compensation laws are usually located in a state’s statutes.

In California, workers' compensation insurance is mandatory for all employers, even if they have only one employee. The state operates under a no-fault system, which means that employees are entitled to receive benefits for work-related injuries or illnesses regardless of who was at fault. These benefits include medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits, and death benefits. Employers are required by law to purchase workers' compensation insurance from either a licensed insurance company or through the State Compensation Insurance Fund (SCIF), a state-operated entity that provides workers' compensation insurance. Failure to carry workers' compensation insurance is a criminal offense in California and can result in fines and imprisonment. The exclusive remedy provision applies, meaning that for most work-related injuries, the workers' compensation system is the sole method by which an employee can receive compensation from their employer, thus preventing the employee from suing the employer for injuries covered by workers' compensation.