So you're ready to hire your first employee for your veterinary practice. Congratulations—this is a huge milestone! But here's what catches most new employers off guard: the moment you bring on that first team member, you're stepping into a whole new world of insurance requirements and legal obligations. And unlike buying liability insurance for your practice, many of these aren't optional.
The good news? Once you understand what's required, setting up the right coverage is straightforward. This guide walks you through exactly what insurance you need when hiring your first veterinary assistant, technician, or receptionist—and why each piece matters for protecting both your employee and your business.
Workers' Compensation: The Big Non-Negotiable
Let's start with the big one: workers' compensation insurance. In most states, you're legally required to carry workers' comp the moment you hire your first employee. Not your second. Not when you hit five employees. Your first one.
For veterinary practices in 2025, workers' comp averages about $0.93 per $100 of payroll. So if you're paying your new vet tech $40,000 a year, you're looking at roughly $372 annually for this coverage. That's pretty reasonable when you consider what it does: it covers your employee's medical expenses and lost wages if they're injured on the job, and it shields you from lawsuits related to workplace injuries.
Why does this matter so much in veterinary medicine? Because your staff faces real risks every day. Animal bites are common, even with the gentlest patients. Lifting a 70-pound Labrador onto an exam table can strain backs. Slips in wet areas happen. Needle sticks occur. Your employee might be exposed to X-ray equipment or chemical hazards. These aren't hypothetical dangers—they're part of daily practice life.
A few states have special rules. Georgia and Florida, for instance, only require coverage after you reach a certain number of employees. And if you're in Ohio, North Dakota, Washington, or Wyoming, you'll need to buy coverage through your state's government-operated fund rather than a private insurer. Check your specific state requirements before your first employee's start date.
Getting the Classification Right
Here's something that trips up a lot of first-time employers: workers' comp premiums are based on employee classification codes, and using the wrong code can either cost you money or leave you underinsured.
For most veterinary practices, you'll use Class Code 8831. This covers veterinary employees who come into contact with animals, even if it's only occasionally. Your receptionist who sometimes helps hold a nervous cat? Code 8831. Your vet tech who works directly with animals all day? Also 8831. This classification recognizes the unique risks your team faces.
Some states do their own thing—Pennsylvania and Delaware use Code 0959 for veterinary practices instead. And if you offer additional services like pet grooming or in-home care, those might fall under different codes with different rates. When you're setting up coverage, make sure your insurance agent understands exactly what roles your employees will fill. Misclassification isn't just about premium accuracy—it can create coverage gaps if a claim arises.
Employment Practices Liability Insurance: The Coverage You Hope to Never Use
Unlike workers' comp, Employment Practices Liability Insurance (EPLI) isn't legally required. But here's the reality: about 1 in 5 businesses will face an employment-related claim at some point. And when they do, the average cost exceeds $100,000—even for claims that have little merit.
EPLI protects you against claims of discrimination, harassment, wrongful termination, failure to promote, and retaliation. It can also cover wage and hour violations and, in some policies, third-party claims from clients or independent contractors. Think you're too small to worry about this? Think again. Employment law doesn't care if you have 4 employees or 40. The same federal and state protections apply.
Here's what makes EPLI particularly important: most general liability policies specifically exclude employment practices claims. And the few that offer any protection typically cap it at $10,000—nowhere near enough if you're facing a serious allegation. A dedicated EPLI policy fills this gap, covering legal defense costs, settlements, and judgments.
The cost varies based on your number of employees, your industry risk profile, and the coverage limits you choose, but for a small veterinary practice with one or two employees, it's typically quite affordable—often a few hundred dollars annually. Given what you're protecting against, it's worth serious consideration even when you're just starting to build your team.
Payroll Systems and Employer Obligations
Beyond insurance, hiring your first employee triggers a cascade of payroll-related obligations. You'll need to withhold and remit Social Security and Medicare taxes. You'll need to pay state and federal unemployment insurance. You'll need to report wages accurately and issue W-2 forms. And you'll need to calculate your workers' comp premiums based on actual payroll.
Many new employers underestimate the administrative load here. It's not just about cutting a paycheck—it's about compliance with federal labor laws like the Fair Labor Standards Act (FLSA), which governs minimum wage, overtime, and employee classification. You'll also need to comply with the ADA, Title VII, and various state-specific employment laws.
If you're in California, there's an additional requirement starting in 2026: under the Workplace Know Your Rights Act (Senate Bill 294), you must provide written notice to all employees about their workers' compensation rights by February 1, 2026, and annually after that. This notice must explain disability pay, medical care for work-related injuries, and other benefits. Other states may have similar requirements, so check your local regulations.
Most veterinary practices find that using a payroll service provider simplifies this immensely. These services handle tax withholding, file required reports, and keep you compliant with changing regulations. Some even integrate workers' comp premium payments automatically based on your actual payroll, so you're never overpaying or underpaying.
Other Insurance Considerations for Growing Practices
While workers' comp and EPLI are the critical new coverages when you hire your first employee, it's also a good time to review your entire insurance portfolio. Do you have professional liability insurance to protect against malpractice claims? What about general liability to cover client injuries on your premises? Commercial property insurance for your equipment and facility?
As your practice grows, you might also consider offering employee benefits like health insurance, which can help you attract and retain quality staff. Under COBRA, if you reach 20 employees, you'll need to offer continuation coverage to employees who leave. And if you set up a Section 125 cafeteria plan, your employees can pay their health insurance premiums with pre-tax dollars, saving everyone money.
Some veterinary practices bundle multiple coverages into a Business Owner's Policy (BOP), which typically combines general liability, commercial property, and business interruption insurance at a lower cost than buying each separately. As you add employees, your BOP may need adjustments to reflect your increased liability exposure.
Getting Started: Your First-Employee Insurance Checklist
Before your first employee's start date, take these steps to ensure you're properly covered and compliant:
First, contact an insurance agent who specializes in veterinary practices. They'll understand the unique classification codes, risk factors, and coverage needs specific to your industry. Ask about bundling workers' comp with EPLI to potentially save on premiums. Make sure you're using the correct class code (typically 8831) for your employees, and provide accurate payroll projections so your premium calculations are correct from the start.
Second, verify your state's specific requirements. While most states require workers' comp from employee one, some have different thresholds. Check whether you need to buy through a private insurer or a state fund. Look into any notification requirements like California's new workers' comp rights notice.
Third, set up your payroll system with all required withholdings and reporting. Consider using a payroll service to handle the complexity. Ensure your workers' comp premiums are calculated based on actual payroll, not estimates, to avoid surprise bills or refunds during your annual audit.
Finally, document everything. Keep copies of your insurance certificates, employee notices, and payroll records. Create an employee handbook that outlines workplace safety procedures, injury reporting protocols, and anti-discrimination policies. These documents protect both you and your employees.
Hiring your first employee is exciting—it means your practice is growing. By understanding your insurance obligations upfront and setting up the right coverage before day one, you're protecting your employee, your business, and your future. The upfront cost and administrative work are modest compared to the risks of going without coverage. Talk to a veterinary insurance specialist today to get quotes and ensure you're fully prepared for this important next step.
