You've been running your chiropractic practice solo for a while now, and business is picking up. Your schedule is packed, the phone keeps ringing, and you're starting to think it's time to hire that receptionist or chiropractic assistant you've been dreaming about. But here's what catches most chiropractors off guard: the moment you hire your first employee, your insurance needs change dramatically. And in most states, you're legally required to have certain coverage in place before that new hire's first day.
Let's break down exactly what insurance you need, what it costs, and how to avoid the expensive mistakes many practice owners make when bringing on their first team member.
Workers' Compensation: The Non-Negotiable First Step
Here's the reality: in most states, workers' compensation insurance isn't optional once you have employees. Twenty-five states require coverage from the very first employee, regardless of whether they work full-time, part-time, or just a few hours a week. States like California, New York, New Jersey, Illinois, and Massachusetts don't give you any wiggle room. One employee equals mandatory coverage.
Even in states with higher thresholds, you might need coverage sooner than you think. Virginia requires it at three employees, while Alabama, Mississippi, and Missouri don't mandate it until you hit five. The only real exception is Texas, which doesn't require most private employers to carry workers' comp at all, though many choose to anyway for liability protection.
The good news? Workers' comp for chiropractors is relatively affordable. The national average is about $0.27 per $100 of payroll. So if you're paying your new receptionist $30,000 a year, you're looking at roughly $81 annually in workers' comp premiums. That's because chiropractic work is considered moderate risk compared to construction or manufacturing.
Understanding Classification Codes and What They Mean for Your Bottom Line
Most chiropractic practices fall under workers' comp class code 8832, which covers offices of chiropractors and similar medical practitioners. Here's something that surprises many practice owners: in most states, you can't separate your receptionist or office manager into a cheaper clerical classification. Everyone in your practice, from the chiropractor to the front desk staff, gets classified under the same code.
This is different from many other businesses where clerical workers can be classified under code 8810, which carries much lower rates. But for chiropractic offices, insurance carriers view the entire operation as an integrated medical practice, so everyone falls under the higher medical professional classification.
If you're bringing on a massage therapist or offering specialized wellness services, things can get more complex. Massage therapists working in your office typically fall under the same 8832 code, but if they make home visits, they might need to be classified under code 8835 for home health care providers. This matters because different codes carry different rates, and misclassification can lead to audits and unexpected bills down the road.
Employment Practices Liability Insurance: Your Protection Against Employee Claims
While workers' comp covers physical injuries on the job, Employment Practices Liability Insurance (EPLI) protects you from a different kind of workplace claim. Think wrongful termination, discrimination, sexual harassment, wage disputes, or retaliation claims. These are the lawsuits that can drain your bank account even if you ultimately win, because legal defense costs alone can run into six figures.
Here's the thing: small businesses are actually more vulnerable to these claims than large corporations. Why? Because you probably don't have an HR department, employee handbooks with clear policies, or legal counsel on retainer. You're making it up as you go, which means you're more likely to inadvertently violate employment laws you didn't even know existed.
The average cost for EPLI is about $222 per month for small businesses, though 36% of small business owners pay less than $150 monthly. Many insurers offer it as an add-on to your general liability or business owner's policy for as little as $18 per employee per year. That's incredibly cheap insurance against claims that could potentially bankrupt your practice.
Your employment liability exposure begins the moment you interview a prospective employee and continues through their entire tenure and even after termination. A single discrimination claim can cost tens of thousands to defend, even if it's completely baseless. EPLI gives you access to legal defense and covers settlements or judgments up to your policy limits.
Beyond Insurance: Payroll and Compliance Requirements
Your first employee doesn't just trigger insurance requirements. You'll also need to set up payroll tax withholding, register for state unemployment insurance, report new hires to your state, and potentially comply with federal employment laws like the Americans with Disabilities Act (ADA) and the Fair Labor Standards Act (FLSA).
You'll need to obtain an Employer Identification Number (EIN) from the IRS if you don't already have one. You'll need to file quarterly payroll tax reports and year-end W-2 forms. And you'll want to create an employee handbook that outlines your policies on everything from vacation time to harassment prevention, because that documentation becomes your first line of defense in any employment dispute.
Many chiropractors work with a payroll service provider to handle these complexities. Companies like ADP, Paychex, or Gusto can manage payroll processing, tax withholding, and compliance reporting for a modest monthly fee. They'll also help ensure you're meeting your workers' comp reporting requirements, since your premiums are based on actual payroll figures verified through audits.
How to Get Started: Your Pre-Hiring Checklist
Before you post that job listing or make an offer to your first employee, take these steps to protect yourself and your practice. First, verify your state's workers' comp requirements with your state's workers' compensation board or a licensed insurance agent. Don't rely on general information because requirements change frequently and vary dramatically by location.
Second, shop for workers' compensation coverage at least two weeks before your new hire's start date. Most policies have a waiting period, and you need coverage in place from day one. Get quotes from multiple carriers and ask specifically about classification codes to ensure you're being quoted accurately for chiropractic office work.
Third, review your existing business insurance policies. If you have a Business Owner's Policy (BOP) or general liability coverage, ask your agent about adding EPLI as an endorsement. This is almost always cheaper than buying a standalone policy, and it ensures all your coverage is coordinated.
Hiring your first employee is an exciting milestone for your chiropractic practice. It means your business is growing and you're building something bigger than yourself. But it also means taking on new responsibilities and new risks. The right insurance coverage doesn't just protect you from financial catastrophe; it gives you peace of mind to focus on what you do best: helping patients feel better. Take the time to get your coverage right from the start, and you'll avoid the headaches that come from scrambling to fix insurance problems after they become legal problems.
