Utah workers' comp for your first employee: is it required, what it costs, how to get it
By the FirstHire Team · Last updated Nov 4, 2026 · Prices checked Nov 4, 2026
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Short answer: yes. In Utah, workers' compensation is required as soon as you have one employee, and that includes part-time help. Below is who is exempt, how the price is figured, real rate ranges by job type, and the steps to get covered before your new hire's first shift.
Is workers' comp required for one employee in Utah?
Yes. Utah Code 34A-2-103 treats anyone who "regularly employs one or more workers" as an employer, and 34A-2-201 says each employer must insure the payment of workers' comp benefits (or get approved to self-insure, which is not realistic for a one-person payroll). The statute defines "regularly" to include work in the usual course of your business "whether continuous throughout the year or for only a portion of the year," so seasonal and part-time help count.
The Utah Labor Commission puts it simply: with a few exceptions, every employer must cover all its employees.
Who is not required to have it
- Owners with no employees. Sole proprietors, partners and LLC members aren't required to cover themselves. If they work as contractors for someone else and that client wants proof, they can apply for a Workers' Compensation Coverage Waiver ($50 nonrefundable fee, good for one year).
- Corporate officers. A Utah corporation with no employees except up to five directors or officers can file a corporate exclusion. Once you hire a regular employee, that employee still has to be covered.
- Some household employers. A domestic employer who doesn't employ anyone at least 40 hours a week isn't considered an employer under the Act (34A-2-103(4)).
- Some farms. Immediate family members aren't counted, and non-family farm payroll under $8,000 the prior year is exempt. From $8,000 to $49,999 the farm needs specific liability and health coverage instead; $50,000 and up needs workers' comp (34A-2-103(5)).
Construction watch-out: if your business must hold a Utah construction trades license and is an LLC or partnership, the law presumes the business employs its owners and must cover them unless the presumption is rebutted under Labor Commission rules (34A-2-103(8)). Ask your agent about this before you assume owners are excluded.
Contractor vs employee: calling someone a 1099 contractor doesn't exempt you if they're really an employee. The Labor Commission specifically calls out misclassifying workers as contractors or LLC "members" to avoid coverage. If you hire a contractor whose work you supervise as part of your business, you can end up responsible for their workers' comp unless you get proof of their coverage or waiver (34A-2-103(7)).
What happens if you skip it
The Labor Commission's penalties page lists:
- Penalties of at least $1,000
- Injunctions that can stop you from operating
- Loss of the "exclusive remedy," which means an injured worker can sue you in court for damages
The Commission says it monitors all Utah employers and investigates suspected non-compliance. Separately, interfering with an employee's claim can bring fines up to $5,000.
What it costs
There's no single price. The basic formula insurers use is class rate × experience mod × (payroll ÷ $100), per Insureon's Utah page. The class rate depends on the job (office work is cheap, roofing is not). Insureon notes the experience mod only applies once annual premium reaches $5,000, so most first-hire businesses won't have one yet.
Here are reference rate ranges from one broker's published Utah table (WorkersCompensationShop, labeled as 2025 rates, per $100 of payroll). These are not quotes. We ran the math on a $40,000-a-year employee to show the spread:
| Job (class code) | Rate per $100 payroll | Premium on $40,000 payroll |
|---|---|---|
| Clerical office (8810) | $0.07–$0.15 | $28–$60* |
| Medical/dental office (8832) | $0.12–$0.26 | $48–$104* |
| Retail store (8017) | $0.68–$1.46 | $272–$584 |
| Electrician (5190) | $1.25–$2.69 | $500–$1,076 |
| Janitorial (9014) | $1.31–$2.82 | $524–$1,128 |
| Landscaping (0042) | $2.16–$4.64 | $864–$1,856 |
| Painting (5474) | $3.17–$6.82 | $1,268–$2,728 |
| Residential construction (5645) | $6.40–$13.76 | $2,560–$5,504 |
| Roofing (5551) | $9.21–$19.80 | $3,684–$7,920 |
*Tiny premiums get pushed up by fixed charges. Gusto's help center says the state-regulated "expense constant" is typically $100–$380 per policy depending on the state, and carriers can set minimum premiums. So a one-person office policy will cost more than the raw math.
Two other reference points, both checked Nov 4, 2026:
- Insureon says its Utah customers pay an average of $44 a month ($526 a year). Most of those customers have fewer than five employees, so this is an average across many job types, not a quote for yours.
- Rates in Utah have been drifting down. NCCI's filing for Feb 1, 2026 proposed a 4.5% statewide decrease in advisory loss costs, and its filing for Feb 1, 2027 proposes a 5.6% decrease. Your carrier still adds its own multiplier, so two carriers can quote the same job differently.
Plug your quoted rate into our true cost calculator or read what your first employee really costs to see it next to payroll taxes.
Where to buy it: your realistic options
All three payroll options below sell pay-as-you-go workers' comp through the same partner, ERGO NEXT (formerly NEXT Insurance). That's worth knowing: picking between them doesn't get you a different insurer. To compare actual insurers, use WCF or an independent agent.
| Option | How you pay | Honest downsides |
|---|---|---|
| Gusto + ERGO NEXT Payroll from $49/mo + $6/person (Simple) | Premium is taken each payroll based on actual wages. Gusto adds $1 per employee per month (max $5). | Gusto only integrates NEXT policies. If you don't run payroll at least once a month, you risk the policy being canceled. Premium questions go to NEXT, not Gusto. |
| OnPay + ERGO NEXT Payroll starts at $55/mo | Pay-as-you-go through OnPay's integration, no large upfront premium. | Same insurer as Gusto and Homebase. OnPay says it isn't an insurance company; if you buy coverage elsewhere, you still manage and pay that policy yourself. |
| Homebase Payroll + ERGO NEXT Payroll: 6 months free, then $49/mo + $6/employee (page also lists $29/mo for teams up to 5) | Pay-as-you-go, set up under HR → Business Insurance, premiums auto-withdrawn by NEXT. | Only for Homebase Payroll customers. Quotes, coverage and changes are handled by NEXT, so you deal with two companies. |
| WCF Insurance (Sandy, UT) | Direct quote from a Utah-based carrier; formerly the Workers Compensation Fund. | No published prices, so you have to request a quote. It's one carrier, so you won't know if it's cheapest without comparing. Insureon describes WCF as Utah's insurer of last resort if other carriers turn you down. |
| Independent agent | One application, quotes from several carriers. | Slower than an instant online quote, and quality varies by agent. Check the agent's license with the Utah Insurance Department. |
Pay-as-you-go matters most for a first hire because you don't have to guess annual payroll up front, and it lowers the chance of a big bill at the year-end audit. Gusto's help center gives the example of paying about $87.50 a month instead of $1,050 at once (their national-average illustration, not a Utah quote).
Comparing payroll tools too? See best payroll software for 1 employee and Homebase vs When I Work vs Deputy.
Step by step: get covered before day one
- Write down the job duties. The class code comes from what the person actually does. If one person does two kinds of work (say, office work and job-site work), tell the insurer; it affects the code and the price. Insurers audit payroll, so guessing low tends to come back as a bill.
- Decide about owners. LLC members and sole proprietors aren't covered automatically; corporate officers are employees unless excluded in writing. If you're in licensed construction, read the watch-out above.
- Get two or three quotes. For example: one pay-as-you-go quote through your payroll provider, one from WCF, and one through an independent agent. Ask each for the class code, rate, minimum premium and any fees.
- Bind the policy before the first shift. Utah requires coverage to be kept in force, and the courts have held that buying coverage later doesn't erase a period you were uninsured.
- Hang the notice. Utah requires a workers' comp compliance notice posted in a conspicuous spot. It's free in English and Spanish from the Labor Commission.
- Check that you show up. A few weeks later, look yourself up in the coverage verification tool linked on the Labor Commission resources page (run by NCCI). The Commission notes it isn't a legal verification, so keep your policy declarations page too.
- Set renewal and audit reminders. Put the policy expiration date and audit month on your calendar. If you already use Make to automate business tasks, it can send you a reminder email, but a free calendar reminder does the job just as well.
If your employee gets hurt
- Get them medical care first.
- Within 7 days of learning about the injury, send Form 122e (Employer's First Report of Injury or Illness) to your insurance carrier and give a copy to the worker. The carrier then has 14 days to report it to the state. (Labor Commission)
- Separately from the insurance claim, the Labor Commission says an employer must report an accident within 8 hours of when it happens (Utah Admin. Code R614-1-5(B)(1)). Call (801) 530-6901 or (800) 530-5090.
- Don't discourage the claim. Interfering can mean fines up to $5,000.
Free Utah help
- Utah Labor Commission, Industrial Accidents Division: coverage rules, waivers, exclusions, posters. Compliance questions: (801) 530-6800. The Division also offers free outreach presentations: (801) 530-6271.
- Utah Insurance Department: regulates the insurers and can check an agent's license.
- Utah DWS employer portal: unemployment account and new hire reporting.
- Utah State Tax Commission: withholding account. See Utah payroll taxes for new employers.
- Utah SBDC: free one-on-one advising for small businesses.
- business.utah.gov: state small business resources.
Want this as a printable checklist? The $9 First Hire Kit has a Utah first-employee checklist, a payroll deadline calendar and a cost calculator spreadsheet. Everything in this guide is free either way.
FAQ
Do I need workers' comp for a part-time employee in Utah?
Yes. The law covers anyone you regularly employ, including part-time and seasonal work. The household-employee 40-hours rule applies only to domestic employers, not businesses.
I'm an LLC with no employees. Do I need it?
No, not for yourself. LLC members aren't required to be covered. Some clients still ask for proof; the Labor Commission's $50 coverage waiver is the usual answer. Licensed construction LLCs have special rules (see above).
Can I hire my first employee as a 1099 contractor to avoid it?
Only if they're truly a contractor: independent, not under your routine control, doing a defined job. If you treat them like an employee, Utah treats them like one.
Is workers' comp a payroll tax?
No. It's an insurance premium you pay to an insurance carrier, separate from the withholding and unemployment taxes you pay the state.
Does health insurance cover work injuries instead?
Don't count on it. Insureon notes health insurers may deny work-injury claims, and in any case health insurance doesn't replace the legal requirement.
How we researched this: we read Utah Code 34A-2-103 and 34A-2-201, Utah Labor Commission and Utah Insurance Department pages, NCCI's Utah filings, and the official workers' comp and pricing pages for Gusto, OnPay and Homebase on Nov 4, 2026. Rate ranges come from a broker's published reference table, not from quotes we requested. We have not bought a policy through any of these providers. Prices and rates change; confirm with the provider before you buy.
Sources: Utah Code 34A-2-103, Utah Code 34A-2-201, Labor Commission Employers' Guide, Labor Commission employers & penalties, Coverage waivers, Labor Commission resources, Utah Insurance Department, NCCI Utah filing (Feb 2026), NCCI Utah filing (Feb 2027), Anabasis v. Labor Commission (Utah Ct. App. 2001), Insureon Utah, WorkersCompensationShop Utah rates, Gusto Help Center: workers' comp with ERGO NEXT, Gusto pricing, OnPay workers' comp help, OnPay workers' comp, Homebase workers' comp help, Homebase pricing, WCF Insurance. Prices checked Nov 4, 2026. Not insurance, tax or legal advice.