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 Colorado, workers' compensation insurance is mandatory for all employers with one or more employees, whether they are full-time, part-time, or family members. This insurance provides medical benefits and wage replacement to employees who are injured on the job or suffer work-related illnesses. It also provides death benefits to dependents of workers who have died due to job-related injuries. Colorado's workers' compensation system operates under the exclusive remedy provision, meaning that for covered employers, employees generally cannot sue their employer for workplace injuries or illnesses; instead, they must file a claim through the workers' compensation system. However, if an employer fails to carry the required insurance, they are considered a nonsubscriber and lose the protections of the exclusive remedy provision, potentially exposing themselves to civil lawsuits from injured employees. Employers who do not comply with the requirement to carry workers' compensation insurance may also face penalties from the state.