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 Pennsylvania, workers' compensation insurance is mandatory for most employers under the Pennsylvania Workers' Compensation Act. Employers are required to provide workers' compensation coverage for all of their employees, including seasonal and part-time workers. Independent contractors may not be covered, but the definition of an independent contractor is strict, and many workers qualify as employees. The insurance provides medical care and wage-loss benefits to employees who suffer a work-related injury or illness, as well as death benefits to dependents of workers who have died as a result of their employment. Pennsylvania law provides the exclusive remedy provision, meaning that for covered employees, workers' compensation benefits are typically the sole recourse against an employer for work-related injuries or illnesses. This exclusivity also serves as a 'workers' compensation bar,' preventing employees from suing their employer for most work-related injuries. However, if an employer fails to carry workers' compensation insurance, they can face severe penalties and may lose the protections of the exclusive remedy provision, exposing them to potential lawsuits by injured employees.