In Illinois, you need workers' comp as soon as you have your first employee, including a part-time employee. The Illinois Workers' Compensation Act (820 ILCS 305) covers virtually every business with staff, because its list of covered "extra hazardous" enterprises is so broad that almost any employer that uses equipment, makes goods, builds, hauls, or serves food is automatically included from the moment it hires (820 ILCS 305/3).
Who this is for: Illinois owners trying to figure out whether the state requires a policy yet, from a first hire to a growing crew.
The short version
- Illinois requires coverage from the first employee, full-time or part-time; there is no headcount to clear first.
- The Act automatically covers "extra hazardous" businesses, a list so broad it catches almost every employer with staff (820 ILCS 305/3).
- Owners are treated by entity: sole proprietors and partners are out unless they elect in; corporate officers and LLC members are in unless they exempt out.
- Construction is covered at the first employee and gets the state's heaviest enforcement.
- Going without required coverage can be a felony, with each day a separate offense (820 ILCS 305/4).
How Illinois's coverage rule works
Illinois does not use a small-employer headcount the way some states do. The Commission that runs the system, the Illinois Workers' Compensation Commission, states plainly that if you have one employee, even a part-time employee, you must obtain workers' compensation insurance, and it estimates that roughly 91 percent of Illinois employees are covered. The statute gets there through a broad list of covered enterprises: any business using power-driven equipment, producing or fabricating goods, building, hauling, warehousing, or running a kitchen with cutting equipment is automatically bound. A few narrow carve-outs exist, mostly for small farms, casual household help, and real estate agents paid only by commission.
| Your situation | Coverage required? | Why |
|---|---|---|
| One employee, full-time or part-time | Yes | Illinois requires coverage from the first employee (820 ILCS 305/3) |
| A construction crew of any size | Yes | Construction is an extra-hazardous enterprise, covered from the first worker |
| Only the owner, no other workers | Usually no | A sole proprietor or partner is not an employee of their own business |
| Household help under 40 hours a week | Usually no | A domestic worker is covered only at 40 or more hours a week for 13 or more weeks in a year |
Who counts as an employee
Part-time and seasonal staff count the same as full-timers, and they must be covered from the moment they are hired. Family members you pay generally count unless they are exempt owners or fall under a narrow farm exemption. A worker you pay on a 1099 counts if Illinois would treat them as an employee, which the state decides using a right-of-control test for most industries and a stricter three-part test in construction, not the label on the paycheck. A real estate agent paid only by commission is specifically not an employee under the Act.
A Springfield example
Illustrative, not a quote. A Springfield cafe owner runs the shop with the owner plus two part-time baristas. Because there are paid employees, Illinois requires a policy from the first hire, even though no one works full time and the owners are not counted. We place coverage, rate the food-service payroll correctly, and make sure both part-timers are included from day one. See our workers comp for restaurants page.
Real questions Illinois owners ask
Does Illinois require workers comp with just one employee?
Yes. Illinois requires coverage from the first employee, and that includes a part-time employee. There is no headcount you have to reach before the rule applies.
Do part-time employees count in Illinois?
Yes. Part-time workers count the same as full-timers and must be covered from the moment they are hired, so a single part-time hire is enough to require a policy.
Do I count the owners toward the requirement?
It depends on the entity. A sole proprietor or partner is not an employee of their own business, so an owner-only business usually is not required to carry, though owners can elect coverage on themselves.
What if my workers are on a 1099?
The label does not settle it. If Illinois would treat the worker as an employee under its right-of-control test, or the stricter construction test, they count and generally need coverage.
Is construction treated differently in Illinois?
Only in that it gets more scrutiny. Construction is covered from the first employee like other work, but it is the state's heaviest enforcement focus and uses a stricter contractor test.
When exactly do I need the policy in place?
Before your first employee starts. Because coverage is required from the first hire, the policy should already be active so there is no uninsured day.
Are there any exemptions from the Illinois rule?
A few narrow ones. Small farms under a set amount of labor, casual household help below the hours threshold, and real estate agents paid only by commission are outside the requirement.
Why Illinois owners choose Morrow
- We shop the right market for you. In Illinois you buy workers' comp on the open market from any private carrier licensed in the state, because Illinois has no state fund; if no carrier will take you, the Illinois Workers' Compensation Assigned Risk Plan (the assigned-risk plan) is the guaranteed fallback, so we can shop your rate freely and still keep a backstop for hard-to-place work.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Illinois guides
Every Illinois business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Illinois (start here)
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Hiring your first employee: what changes
- What workers comp does not cover
- Illinois restaurant workers comp
This guide is general information, not legal advice. Illinois rules and penalty amounts can change, so verify current requirements with the Illinois Workers' Compensation Commission (IWCC) or a licensed advisor before you rely on them. Last updated: July 2026.