If you're running a business in Oregon, workers' compensation insurance isn't optional—it's the law. And here's what catches most new employers off guard: the threshold is just one employee. Not five. Not ten. One. Whether you're hiring a part-time barista or a full-time accountant, you need coverage before their first day on the job.
Oregon takes workers' comp seriously, and the penalties for skipping it are steep. But understanding the requirements doesn't have to be complicated. Let's break down exactly what you need to know about Oregon's workers' compensation laws, who's exempt, and how to stay compliant.
The One-Employee Rule
Oregon's workers' compensation law is straightforward: if you have at least one subject worker, you must either purchase workers' compensation insurance or qualify as a self-insured employer. This applies to businesses of all sizes, from solo operations hiring their first employee to large corporations.
The term "subject worker" is important. Every worker in Oregon is considered a subject worker unless they fall under one of about 30 specific exemptions outlined in state law. This includes full-time employees, part-time workers, seasonal staff, and even workers who've been on the job for just a few hours. The coverage requirement kicks in immediately—there's no grace period or waiting threshold.
You have two options for meeting this requirement: purchase a policy from an insurance carrier like SAIF Corporation (Oregon's state-chartered workers' comp insurer) or a private carrier, or qualify as a self-insured employer. Self-insurance requires meeting strict financial and operational standards, so most small and mid-sized businesses go the traditional insurance route.
Who's Actually Exempt?
Oregon law provides about 30 exemptions from workers' compensation coverage, but most employers shouldn't assume their workers qualify. The exemptions are specific and strictly interpreted. Here are the most common ones:
Sole proprietors, partners, and corporate officers who maintain at least 10% ownership in the company can elect not to be covered. This is an optional exemption—owners can choose to be covered if they want protection for themselves. Independent contractors who meet strict criteria and have no employees of their own may also be exempt, but Oregon's independent contractor test is rigorous. If someone is misclassified, you're on the hook for coverage and potential penalties.
Domestic servants working in a private home, casual employees whose work isn't part of your regular trade or profession, and employees earning less than $500 per year are also exempt. Homeowners hiring someone for gardening, maintenance, or remodeling work don't need coverage for those workers. But if you're a landscaping company hiring a crew, that's different—those are subject workers who must be covered.
The key distinction is whether the work is part of your business operations. A restaurant owner hiring a plumber to fix a sink? That's casual labor, likely exempt. A plumbing company hiring an apprentice? That worker needs coverage. When in doubt, err on the side of providing coverage—it's far less expensive than the alternative.
The Real Cost of Non-Compliance
Oregon doesn't mess around with workers' comp violations. The penalties are designed to be punitive enough that skipping coverage is never worth the risk. For a first offense, you'll pay twice the amount of premium you should have paid for insurance, with a minimum penalty of $1,000. That's not a typo—double the premium, minimum four figures.
But it gets worse if you don't fix the problem immediately. For each additional day of noncompliance after the first order, you'll face penalties of up to $250 per day. There's no cap on the total penalty. Let that sink in—if you ignore the first warning and continue operating without coverage for a month, you're looking at $7,500 in daily penalties alone, plus the doubled premium penalty.
For repeat offenders, Oregon's Workers' Compensation Division will request a permanent court injunction forcing compliance. If you violate that injunction, you're in contempt of court and could face jail time. Corporate officers should pay special attention here—failure to maintain coverage can result in personal liability for premiums and penalties, even if the business is incorporated.
Beyond the fines, there's the practical risk. If a worker gets injured on the job and you don't have coverage, you're personally liable for all medical costs, lost wages, and potential legal damages. A serious workplace injury can easily run into six figures. That's a business-ending liability for most small employers.
SAIF and Your Insurance Options
Oregon operates what's called a competitive state system for workers' compensation. Unlike monopolistic states where you must buy from the state fund, Oregon allows you to choose between the state-chartered SAIF Corporation and private insurance carriers. This competition generally keeps rates reasonable and gives you options.
SAIF Corporation is Oregon's largest workers' comp insurer, covering more than 54,000 employers and protecting over half a million workers. Founded in 1914 and restructured as a state-chartered public corporation in 1980, SAIF operates as a not-for-profit entity. It receives no state funding—all revenue comes from premiums and investment returns. Many Oregon employers choose SAIF for its stability, local presence with six offices statewide, and mission-driven focus on helping Oregon businesses.
Private carriers offer an alternative, and shopping around can sometimes save money depending on your industry, claims history, and business size. Rates are based on your industry classification, payroll, and claims experience. High-risk industries like construction or manufacturing pay more than office-based businesses, but safety programs and good claims management can earn you discounts over time.
Getting Started with Coverage
The process of getting workers' compensation coverage in Oregon is straightforward. If you're going with SAIF, you can apply online through their website or contact one of their local offices. For private carriers, you can work with an insurance agent who specializes in business insurance. Either way, you'll need basic business information: your business structure, number of employees, estimated annual payroll, and industry classification codes.
Plan to set up coverage before your first employee's start date. Most insurers can issue a policy quickly, but don't leave it to the last minute. Your premium is based on your estimated payroll, and you'll reconcile at year-end based on actual payroll—so keep accurate records throughout the year.
Once you have coverage, make sure your employees know what to do if they're injured. Oregon law requires you to post workers' compensation information in a visible location at your workplace. Your insurer will provide the required posters. When an injury occurs, report it to your carrier immediately—prompt reporting leads to better outcomes for everyone involved.
Workers' compensation isn't just a legal checkbox—it protects your business from catastrophic financial risk and ensures your employees have support if they're hurt on the job. With Oregon's low one-employee threshold and serious penalties for non-compliance, getting coverage should be one of your first priorities when hiring. Whether you choose SAIF or a private carrier, the peace of mind is worth every penny of premium.
