Our Maryland Nonprofit: Do We Need Workers Comp?

If your Maryland nonprofit has even one paid employee, yes, it needs workers compensation insurance. Being a 501(c)(3) or otherwise tax-exempt does not exempt you from the state's Workers' Compensation Act; Maryland requires nearly every employer with a covered employee to carry coverage, and a nonprofit is an employer like any other. Part-time and seasonal staff count. The main open question for most nonprofits is how volunteers are treated, since a genuine unpaid volunteer is generally not an employee, because they work without pay.

Who this is for: Maryland nonprofit boards and directors, from an all-volunteer group about to hire its first staffer to an established charity with paid employees.

The short version

A nonprofit needs workers comp once it has one paid employee, just like a for-profit business.
Tax-exempt status does not create a workers comp exemption in Maryland.
Part-time and seasonal staff count; a true one-off casual worker is the narrow exception.
A genuine unpaid volunteer generally isn't an employee, so the obligation usually turns on paid staff.
Grants, funders, and landlords often require proof of coverage on top of the legal rule.

Why tax-exempt does not mean comp-exempt

A common misread is that a charity's tax status carries over to workers comp. It does not. Maryland's coverage requirement is about the employment relationship, not about whether the organization pays income tax, so a nonprofit that pays anyone to work is an employer that must secure coverage. That first paid hire, even a single part-time program coordinator, brings the organization under the same rule as a corner store. The people the nonprofit pays are covered employees; the board members who serve without pay generally are not, because they are not working for pay.

Staff and volunteers at a nonprofit

Who they are	Covered employee?	Notes
Paid full-time staff	Yes	Triggers coverage from the first one
Paid part-time or seasonal staff	Yes	Counts the same as full-time for the requirement
Stipended workers who are really employees	Usually yes	If they work under your direction for pay, a stipend does not change it
Genuine unpaid volunteer	Generally no	Not working for pay, so usually not a covered employee
Unpaid board member	Generally no	Board service without pay is not employment

Volunteers, stipends, and the gray areas

Volunteers are where nonprofits should slow down. A true volunteer who receives nothing of value is generally outside the definition of a covered employee, so an all-volunteer group with no paid staff usually does not need a policy. But the picture changes when money or its equivalent appears: a stipend, an hourly payment, or a paid coordinator role can make someone a covered employee even if the organization calls them a volunteer. Because Maryland looks at the real working relationship, a nonprofit that pays people should assume it needs coverage and confirm the edge cases rather than guess. Many nonprofits also carry comp because grant agreements, government contracts, and building leases require proof of coverage regardless of the legal minimum. Some organizations even choose to buy a policy that includes their regular volunteers, so a volunteer injury is handled cleanly.

A Baltimore example

Illustrative, not a quote. A Baltimore community nonprofit runs for years on volunteers with no paid staff and carries no comp policy, which is generally fine while no one is paid. When a foundation grant lets it hire a part-time program coordinator, Maryland's requirement kicks in from that first paid hire, so the nonprofit buys a policy before the coordinator starts. The grant agreement also requires proof of coverage, so the same policy satisfies both the law and the funder. We help the board classify the coordinator's work correctly and decide whether to extend coverage to their regular volunteers. See our workers comp for nonprofits page.

Real questions Maryland owners ask

Does a Maryland nonprofit need workers comp?

Once it has one paid employee, yes. Tax-exempt status does not exempt you, because Maryland's rule is about employing people, and a nonprofit that pays anyone to work is an employer like any other.

We are tax-exempt. Does that cover workers comp too?

No. Being a 501(c)(3) or otherwise tax-exempt affects income tax, not workers comp. The state's coverage requirement is based on the employment relationship, so paid staff still need coverage.

Do we need coverage for volunteers?

Usually not for genuine unpaid volunteers, because they are not working for pay. But a stipend or pay can turn a volunteer into a covered employee, so confirm any edge cases.

We only have part-time staff. Do we still need it?

Yes. Part-time and seasonal paid staff count toward the requirement in Maryland. There is no hours exception, so even a single part-time employee brings the nonprofit under the rule.

Do stipends count as pay for workers comp?

They can. If a stipended person works under your direction, Maryland may treat them as a covered employee despite the volunteer label, because it looks at the real working relationship, not the title.

Do grants or funders require proof of coverage?

Often, yes. Many grant agreements, government contracts, and building leases require proof of workers comp regardless of the legal minimum, which is a common reason nonprofits carry a policy.

What happens if we hire and skip coverage?

You are exposed. Maryland can order the nonprofit to get covered and pay up to 25,000 dollars, treat the failure as a misdemeanor, and let an injured worker sue without the organization's usual defenses.

Why Maryland owners choose Morrow

We shop the right market for you. In Maryland you buy workers' comp on the open market from any private insurer licensed in the state, and Maryland also runs a competitive state fund, Chesapeake Employers' Insurance Company, that both competes for ordinary business and must cover eligible employers no one else will take, so we can shop your rate widely and still have a guaranteed fallback 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 Maryland guides

Every Maryland 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.

This guide is general information, not legal advice. Maryland rules and penalty amounts can change, so verify current requirements with the Maryland Workers' Compensation Commission or a licensed advisor before you rely on them. Last updated: July 2026.