If you're running a business in Nebraska, workers' compensation insurance isn't optional—it's the law. But here's what trips up most business owners: the rules aren't as straightforward as "hire someone, buy insurance." Nebraska has specific thresholds, exemptions, and penalties that you need to understand before you bring on your first employee. Get it wrong, and you're looking at $1,000 fines per day, potential criminal charges, and the very real possibility of being shut down.
The good news? Once you understand Nebraska's workers' comp requirements, compliance is straightforward. Whether you're hiring your first employee, expanding into agriculture, or structuring your business ownership, this guide breaks down exactly what you need to know to protect your employees and your business.
Who Needs Workers' Compensation in Nebraska?
Nebraska's Workers' Compensation Act casts a wide net. The law applies to the State of Nebraska, every governmental agency it creates, and virtually every employer in the state employing one or more employees in their regular trade, business, profession, or vocation. Yes, you read that right—just one employee.
This means if you hire even a single part-time employee to help in your shop, office, or warehouse, you're required to carry workers' comp coverage. The coverage extends to employees of private industry, state and local government, part-time workers, minors, and even employees of charitable organizations. There's no waiting period, no grace window—the requirement kicks in the moment you have an employee on payroll.
Unlike some states that set higher employee thresholds or industry-specific exemptions, Nebraska takes a protective approach. The philosophy is simple: if someone is working for you and gets injured on the job, they deserve coverage. This broad mandate ensures that workers across nearly all sectors have access to medical care and wage replacement if they're hurt while doing their jobs.
Understanding Nebraska's Exemptions
While Nebraska's coverage requirements are broad, several important exemptions exist. These aren't loopholes—they're specific categories of workers and employers the law intentionally excludes. Understanding these exemptions is crucial whether you're structuring your business or determining your staffing strategy.
Business Owners and Officers
If you're a sole proprietor, partner in a partnership, or member of an LLC, you're not required to buy workers' comp coverage for yourself. The law views you as an owner, not an employee. Similarly, executive officers of state corporations who hold 25% or more of their company's common stock aren't considered employees under the act and are exempt from mandatory coverage. Nonprofit corporation officers earning $1,000 or less annually from their nonprofit work are also exempt.
That said, many business owners choose to elect coverage for themselves. If you're actively working in a high-risk industry—construction, manufacturing, landscaping—voluntary coverage can protect you from devastating medical bills and lost income if you're injured on the job.
Agricultural Employers
Agriculture gets special treatment in Nebraska's workers' comp law. If you're an agricultural employer who only employs related employees—spouse, parents, children, siblings, or relatives within the third degree by blood or marriage—you're exempt. Even if you employ unrelated workers, you're still exempt unless you cross a specific threshold: 10 or more unrelated, full-time employees working each day for 13 calendar weeks (whether consecutive or not) in a calendar year.
Here's where it gets important: once you hit that 13th week with 10 or more unrelated full-time employees, the act applies to you 30 days later. You have a one-month window to secure coverage. And if you're an exempt agricultural employer who doesn't elect to provide coverage, you must give all unrelated employees written notice at the time of hiring stating they won't be covered under the Nebraska Workers' Compensation Act. Failure to provide this notice can subject you to liability under the act for any unrelated employee who wasn't notified.
Independent Contractors and Domestic Workers
True independent contractors are not covered under Nebraska's workers' comp requirements. However, the emphasis is on "true." Nebraska courts and the Workers' Compensation Court look at the substance of the relationship, not just what you call it in a contract. If you control when, where, and how the work is done, that person is likely an employee, regardless of what your agreement says.
Household domestic servants are also exempt unless the employer voluntarily elects to provide coverage. If you employ a nanny, housekeeper, or caregiver in your home, you're not required to carry workers' comp for them—but you can choose to do so for added protection.
Penalties for Non-Compliance: What's at Stake
Nebraska doesn't mess around when it comes to enforcing workers' comp requirements. If you're caught operating without required coverage, the consequences are severe and escalate quickly.
The Nebraska Workers' Compensation Court or district court can order you to pay a monetary penalty of up to $1,000 for each violation—and here's the kicker: each day you continue to operate without coverage counts as a separate violation. That means if you go 30 days without coverage, you're potentially facing $30,000 in fines. Sixty days? $60,000. The numbers add up fast.
Beyond civil penalties, criminal charges are on the table. Willfully failing to secure workers' comp coverage is a Class I misdemeanor in Nebraska, punishable by up to one year in jail, a $1,000 fine, or both. And the state can seek an injunction to stop you from doing business entirely until you comply with the law.
If your business is a corporation, LLC, or partnership, the liability doesn't stop at the company level. Any officer, member, manager, partner, or employee who had the authority to secure coverage and willfully failed to do so can be held personally liable—jointly and severally—for the monetary penalties. That means the state can come after your personal assets, not just the business.
Perhaps most importantly, if an employee is injured and you don't have coverage, they can sue you directly for damages. Without the protection of workers' comp insurance, you're exposed to potentially unlimited liability for medical expenses, lost wages, pain and suffering, and more. One serious workplace injury could bankrupt your business and destroy your personal finances.
How to Get Coverage and Stay Compliant
Nebraska operates as a competitive state for workers' compensation insurance, meaning you can shop among multiple private insurance carriers to find the best rates and coverage options. This is different from monopolistic states where you must buy coverage through a state-run fund.
Your workers' comp premium is based on your industry classification, payroll, and claims history. High-risk industries like construction or manufacturing pay more than low-risk office environments. If you've had previous claims, your rates will reflect that. The best way to keep costs down is to maintain a safe workplace and minimize injuries.
To secure coverage, contact insurance carriers licensed to write workers' comp policies in Nebraska. An insurance agent or broker can help you compare quotes from multiple carriers. Make sure the policy is in place before your first employee starts work—not after. Many carriers can bind coverage quickly, sometimes within 24 hours.
Once you have coverage, your responsibilities don't end. You need to post a notice in a conspicuous location at your workplace informing employees of their rights under the Workers' Compensation Act. If an employee is injured, report the injury to your insurance carrier immediately—delays in reporting can complicate claims and potentially affect your coverage.
If you're an employer who qualifies for an exemption but want to provide coverage anyway—perhaps to protect yourself as an owner or to offer better benefits to agricultural or domestic workers—you can voluntarily elect coverage. This election is made simply by obtaining a workers' comp policy from a licensed insurer.
Workers' compensation isn't just a legal requirement in Nebraska—it's a critical protection for both your employees and your business. The cost of coverage is far less than the potential financial and legal consequences of going without. Whether you're hiring your first employee or expanding your workforce, make securing proper workers' comp insurance a top priority. Your employees deserve protection, and your business depends on it.
