Arizona workers comp requirements decide exactly when an employer must carry coverage, who counts toward the threshold, and the penalty for going without. This guide breaks down the Arizona workers comp requirements in plain English. (Injured instead of hiring? See our Arizona settlement and claim guides linked below.) All figures are from Arizona sources, verified as of October 2026.
Arizona at a Glance
| Required at | 1 employee(s) |
| Which workers count | Arizona has no small-employer exemption, no minimum payroll and no minimum hours. “Regularly employed” means work in the employer’s usual trade, business, profession or occupation, whether it runs all year or only part of the year. So full-time, part-time and seasonal workers in the usual business all count. Construction has no separate threshold because every employer is covered from the first employee. A general contractor that keeps supervision or control over a subcontractor’s work can be treated as the statutory employer of the subcontractor’s workers (A.R.S. § 23-902(B)–(C)). Covered workers placed through a professional employer (PEO) agreement are included. |
| Who is exempt | Employers of domestic servants are the only employers the statute exempts, and they may choose to come under the Act. Sole proprietors and partners without employees are not required to cover themselves, though they may choose to. Working shareholders and LLC members who own 50 percent or more generally are not counted as covered employees. Genuine independent contractors are not covered, but disputes are decided on the “totality of facts.” Casual workers who are not doing the employer’s usual trade or business fall outside “regularly employed.” No separate agricultural exemption was found in § 23-902; confirm farm-labor treatment with the Industrial Commission of Arizona. |
| Penalty for going without | Civil penalty of 1000 for a first violation, 5000 for a second within 5 years, and 10000 for a third within 5 years (A.R.S. § 23-907). This applies whether or not an injured worker files a claim. If the ICA Special Fund pays an uninsured worker’s claim, the employer must repay all benefits plus a penalty of 10 percent of the amount paid or 1000, whichever is greater, plus interest. The ICA may ask the Superior Court for an injunction that shuts down the business until coverage is in place. Knowingly failing to secure coverage may be prosecuted as a class 6 felony (A.R.S. § 23-932). The injured worker may also choose to sue the uninsured employer directly, and the employer loses its common-law defenses. |
| Monopolistic state? | No — private carriers |
In This Arizona Guide:
Is Workers’ Comp Required in Arizona?
Yes — Arizona generally requires workers’ compensation coverage once an employer has even one worker regularly employed in its usual trade or business, whether full-time, part-time or seasonal (A.R.S. § 23-902).
Arizona Workers’ Comp Requirements at a Glance
Here are the exact Arizona workers comp requirements every employer should know:
| Employees that trigger the mandate | 1 |
| Which workers count | Arizona has no small-employer exemption, no minimum payroll and no minimum hours. “Regularly employed” means work in the employer’s usual trade, business, profession or occupation, whether it runs all year or only part of the year. So full-time, part-time and seasonal workers in the usual business all count. Construction has no separate threshold because every employer is covered from the first employee. A general contractor that keeps supervision or control over a subcontractor’s work can be treated as the statutory employer of the subcontractor’s workers (A.R.S. § 23-902(B)–(C)). Covered workers placed through a professional employer (PEO) agreement are included. |
| Who is exempt | Employers of domestic servants are the only employers the statute exempts, and they may choose to come under the Act. Sole proprietors and partners without employees are not required to cover themselves, though they may choose to. Working shareholders and LLC members who own 50 percent or more generally are not counted as covered employees. Genuine independent contractors are not covered, but disputes are decided on the “totality of facts.” Casual workers who are not doing the employer’s usual trade or business fall outside “regularly employed.” No separate agricultural exemption was found in § 23-902; confirm farm-labor treatment with the Industrial Commission of Arizona. |
| Owners & officers | A sole proprietor or partner with no employees needs no coverage but may elect it. Working shareholders and LLC members who own less than 50 percent are treated as employees and must be covered. Those owning 50 percent or more are generally excluded unless they elect coverage in writing with the insurer. Separately, under A.R.S. § 23-906 any individual employee, including an officer, may reject coverage by giving the employer written notice before an injury, which the employer files with its carrier. That employee then keeps the right to sue at common law. Confirm the exact steps with the Industrial Commission of Arizona and a licensed attorney. |
| Penalty for going without | Civil penalty of 1000 for a first violation, 5000 for a second within 5 years, and 10000 for a third within 5 years (A.R.S. § 23-907). This applies whether or not an injured worker files a claim. If the ICA Special Fund pays an uninsured worker’s claim, the employer must repay all benefits plus a penalty of 10 percent of the amount paid or 1000, whichever is greater, plus interest. The ICA may ask the Superior Court for an injunction that shuts down the business until coverage is in place. Knowingly failing to secure coverage may be prosecuted as a class 6 felony (A.R.S. § 23-932). The injured worker may also choose to sue the uninsured employer directly, and the employer loses its common-law defenses. |
| Monopolistic state? | No — buy from private carriers |
| State fund | NONE — the former State Compensation Fund of Arizona was privatized on January 1, 2013 and is now CopperPoint Mutual Insurance Company, a private mutual insurer. |
How to Get Workers’ Comp Coverage in Arizona
Buy a policy from a private carrier licensed in Arizona, or qualify with the Industrial Commission of Arizona to self-insure. Employers turned down in the voluntary market can get residual-market coverage through Arizona’s assigned-risk plan, which NCCI administers.
Private market: YES
What Workers’ Comp Covers in Arizona
Workers’ compensation is a no-fault system: an injured employee gets benefits without having to prove the employer did anything wrong, and in exchange gives up the right to sue for most workplace injuries. A typical Arizona policy pays for medical treatment tied to a work injury, part of the wages lost while the worker recovers, longer-term disability benefits if the injury is permanent, and death benefits to a family.
It also includes employers-liability coverage, which protects the business if an injury still leads to a lawsuit.
Employees vs. Independent Contractors in Arizona
The most common way employers get the Arizona workers comp requirements wrong is by assuming a worker is an “independent contractor” who does not count. State agencies look at how the work is actually controlled, not the label on a 1099. If Arizona decides a contractor was really an employee, the business can owe back premiums and penalties as if coverage should have been in place all along.
When you are close to the employee threshold, confirm each worker’s status with your state board before you decide you are exempt.
Other Arizona workers’-comp rules: Under A.R.S. § 23-906, an Arizona employee may reject workers’ compensation coverage in writing before an injury and keep the right to sue the employer instead. The employee can later revoke that rejection, and employers must supply the rejection form. Employees of uninsured employers can file with the ICA Special Fund’s No Insurance Section under A.R.S. § 23-907(B).
The Fund pays compensable claims and then recovers the cost from the employer.
Understanding Arizona Workers Comp Requirements
The Arizona workers comp requirements exist so injured employees get care and lost wages without having to sue. For most employers, the Arizona workers comp requirements come down to one number: the employee count that triggers the mandate, shown in the table above. Once you hit that count, Arizona workers comp requirements apply whether you planned for them or not, and the penalty for going without is real.
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If any part of the Arizona workers comp requirements is unclear, your state board can confirm the threshold, the exemptions, and how to get covered.
Need to get covered? If you are an employer in Arizona shopping for a policy, our sister site compares small-business insurance, including workers’ comp. Compare business insurance options →
Frequently Asked Questions
Is workers’ comp required in Arizona?
Yes — Arizona generally requires workers’ compensation coverage once an employer has even one worker regularly employed in its usual trade or business, whether full-time, part-time or seasonal (A.R.S. § 23-902).
What is the penalty for not having workers’ comp in Arizona?
Civil penalty of 1000 for a first violation, 5000 for a second within 5 years, and 10000 for a third within 5 years (A.R.S. § 23-907). This applies whether or not an injured worker files a claim. If the ICA Special Fund pays an uninsured worker’s claim, the employer must repay all benefits plus a penalty of 10 percent of the amount paid or 1000, whichever is greater, plus interest.
The ICA may ask the Superior Court for an injunction that shuts down the business until coverage is in place. Knowingly failing to secure coverage may be prosecuted as a class 6 felony (A.R.S. § 23-932). The injured worker may also choose to sue the uninsured employer directly, and the employer loses its common-law defenses.
Who is exempt from Arizona workers’ comp?
Employers of domestic servants are the only employers the statute exempts, and they may choose to come under the Act. Sole proprietors and partners without employees are not required to cover themselves, though they may choose to. Working shareholders and LLC members who own 50 percent or more generally are not counted as covered employees.
Genuine independent contractors are not covered, but disputes are decided on the “totality of facts.” Casual workers who are not doing the employer’s usual trade or business fall outside “regularly employed.” No separate agricultural exemption was found in § 23-902; confirm farm-labor treatment with the Industrial Commission of Arizona.
Official Arizona Sources & Resources
- Arizona Industrial Commission of Arizona (ICA): https://www.azica.gov
- Arizona Workers’ Comp Statute: https://www.azleg.gov/arsDetail/?title=23
- U.S. Department of Labor — Workers’ Comp: dol.gov
- Insurance Information Institute: iii.org
These Arizona workers comp requirements were last verified against official sources in October 2026. Rules and penalties change — confirm the current figure with your state workers’-comp board or a licensed agent.
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Disclaimer: This guide is informational only and is not legal, medical, or financial advice. Workers Comp Explained is an independent educational resource, not a law firm or insurer. Workers’ comp benefits, settlement values, deadlines, and requirements vary by state and by the specific facts of your injury and change over time, and any settlement figures here are illustrative only.
Confirm your rights and any deadline with your state’s workers’ compensation board and a licensed attorney before you act.