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 New Mexico (NM), workers' compensation insurance is mandatory for all employers, with very few exceptions. This means that private employers cannot generally choose whether to carry workers' compensation insurance coverage; they are required to have it if they have three or more employees, including part-time workers. The New Mexico Workers' Compensation Act provides benefits for employees who suffer job-related injuries or illnesses, including medical expenses, rehabilitation costs, lost wages, and death benefits for dependents of workers who die from work-related causes. Employers who comply with the Act are protected by the exclusive remedy provision, which limits employees to workers' compensation claims and generally prevents them from suing the employer for work-related injuries. However, if an employer intentionally causes harm or is found to be grossly negligent, this protection may not apply. Nonsubscribers, or employers who unlawfully fail to carry workers' compensation insurance, can face severe penalties and are exposed to civil lawsuits by injured employees without the limitations of the workers' compensation system.