Running a dry cleaning business means dealing with hot pressing equipment, chemical solvents, repetitive motions, and employees on their feet all day. It's physical work with real risks—and that's exactly why workers' compensation insurance exists. If you have employees, you're almost certainly required by law to carry it. But beyond the legal requirement, it's your safety net when someone gets burned by a steamer, develops carpal tunnel from years of pressing, or has a reaction to cleaning chemicals.
Here's what you need to know about workers' compensation for your dry cleaning business—from understanding class codes and costs to reducing your premium through smart safety practices.
Is Workers' Comp Required for Dry Cleaners?
In most states, workers' compensation insurance is mandatory once you hire your first employee. Whether you're running a small mom-and-pop dry cleaner with two part-time workers or a multi-location operation with dozens of employees, the law typically requires you to carry coverage.
The specifics vary by state. Some states require coverage from employee number one. Others have thresholds—like three or five employees—before the mandate kicks in. A handful of states operate monopolistic state funds where you must purchase coverage through the state rather than a private insurer. But the bottom line is the same: if you have employees doing dry cleaning work, you almost certainly need workers' comp.
Skipping this coverage isn't worth the risk. Penalties for non-compliance can include hefty fines, legal liability if an employee gets hurt, and in extreme cases, even criminal charges. If an uninsured employee gets injured on the job, you could face a lawsuit that puts your entire business at risk.
Understanding Class Codes for Dry Cleaners
Workers' comp premiums are based on class codes—four-digit numbers that categorize the type of work your employees do. Insurance companies use these codes to assess risk and set rates. For dry cleaning businesses, the most common codes are:
Class Code 2585 typically covers commercial laundries—operations that wash, press, and clean fabric items, clothing, uniforms, linens, or other textiles for commercial customers rather than the general public. Class Code 2589 is used for retail dry cleaning and laundry services—stores where customers drop off their personal garments and household items for cleaning.
The class code you're assigned depends on your business model and, in some cases, your state. California, Florida, and other states use different classification systems, so the exact code might vary. If more than half your revenue comes from serving retail customers, you'll likely fall under the retail dry cleaning code. If you primarily serve commercial clients like hotels or hospitals, the commercial laundry code applies.
Getting the right class code matters because it directly affects your premium. If your insurer assigns you the wrong code, you could overpay—or underpay and face a big bill during an audit. Make sure your agent understands exactly what your business does.
How Much Does Workers' Comp Cost for Dry Cleaners?
According to recent industry data, dry cleaning and laundromat businesses pay an average of around $1,718 per year for workers' compensation insurance—or about $143 per month. That breaks down to roughly $94 per employee per month, though this varies widely based on your specific situation.
Several factors influence what you'll actually pay. Your state is a big one—workers' comp rates vary significantly from state to state based on local regulations, medical costs, and legal environments. Payroll is another major factor since premiums are calculated per $100 of employee wages. If you have five employees earning $30,000 each versus ten employees earning $25,000, your total payroll—and therefore your premium—will differ.
Your claims history plays a crucial role through something called the experience modification rate (EMR or mod). This is a multiplier applied to your premium based on your past claims. A business with few or no claims might have a mod below 1.0, which lowers their premium. A business with frequent or severe claims could have a mod of 1.2 or higher, increasing costs by 20% or more. If your dry cleaner has a clean safety record, your mod rewards you with lower rates. If you've had multiple employees file claims for chemical burns or back injuries, your mod punishes you with higher premiums.
Common Injuries and Risks in Dry Cleaning
Dry cleaning work comes with specific hazards that drive workers' comp claims. Understanding these risks can help you prevent injuries—and keep your insurance costs down.
Chemical exposure is a major concern. Dry cleaning solvents like perchloroethylene (PERC) can cause skin irritation, eye damage, and respiratory problems. Employees who handle these chemicals daily face ongoing exposure risks that can lead to serious health issues over time. Proper ventilation, protective equipment, and training are essential.
Burns are another frequent injury. Pressing machines, steamers, and other hot equipment can cause serious burns if employees aren't careful or equipment malfunctions. Even experienced workers can get burned during a busy rush when they're moving quickly.
Repetitive motion injuries develop over time. Employees who spend hours pressing, steaming, mending, and manipulating garments can develop carpal tunnel syndrome, tendonitis, and other musculoskeletal disorders. Years of bending, lifting, and standing in awkward positions can lead to chronic back problems and mobility issues that may result in partial or full disability.
Slips and falls happen in wet or cluttered work areas. Dry cleaning facilities often have slick floors from water, cleaning solutions, or spilled materials. Combined with employees carrying large loads of garments that block their vision, this creates fall hazards.
Lifting injuries occur when employees move heavy bags of laundry, lift bulky items like comforters or drapes, or handle deliveries. Without proper lifting techniques and equipment, back strains and hernias are common.
How to Lower Your Workers' Comp Premium
The best way to reduce workers' comp costs is to prevent injuries. Fewer claims mean a better experience mod, which translates directly to lower premiums. Here's how:
Train employees thoroughly on equipment safety, proper lifting techniques, and chemical handling. Make sure everyone knows how to use pressing machines safely, how to bend and lift without straining their backs, and what personal protective equipment to wear when handling solvents.
Maintain equipment properly. Well-maintained pressing equipment is less likely to malfunction and cause burns. Good ventilation systems reduce chemical exposure. Regular maintenance prevents accidents and protects your workers' health.
Encourage ergonomic practices. Provide anti-fatigue mats for employees who stand all day. Use adjustable-height work surfaces where possible. Allow regular breaks to prevent repetitive motion injuries. Small investments in ergonomics can prevent expensive long-term disability claims.
Keep your workplace clean and organized. Immediately clean up spills, keep walkways clear, and ensure adequate lighting. These simple measures prevent most slips and falls.
Shop around for coverage. Workers' comp rates can vary between insurers, so get quotes from multiple carriers. Work with an independent agent who specializes in small business insurance and can compare options for you.
What Workers' Comp Covers
When an employee gets injured on the job, workers' compensation insurance covers their medical expenses—from emergency room visits to ongoing treatment and rehabilitation. It pays for doctor visits, hospital stays, medications, physical therapy, and any other medical care needed to recover.
The policy also replaces lost wages while your employee can't work. If someone burns their hand badly enough that they can't operate pressing equipment for three weeks, workers' comp pays a portion of their regular salary during recovery. For permanent disabilities that prevent someone from returning to their previous job, the policy provides ongoing disability benefits.
In the tragic event of a workplace death, workers' comp provides death benefits to the employee's dependents, covering funeral expenses and providing financial support to surviving family members.
Importantly, workers' comp also protects your business. In exchange for providing this coverage, you generally receive liability protection. Employees who accept workers' comp benefits typically can't sue you for their injuries, which shields your business from potentially devastating lawsuits.
Getting the Right Coverage for Your Dry Cleaning Business
Start by checking your state's specific requirements. Look up your state's workers' compensation board or department of labor website to understand exactly when coverage is required and whether you must purchase through a state fund or can use a private insurer.
Work with an insurance agent who understands dry cleaning operations and can ensure you're assigned the correct class code. Bring documentation of your payroll, employee count, and business operations so they can provide accurate quotes.
Don't wait until you hire your first employee to start shopping for coverage. Get quotes in advance so you're prepared when you need to activate a policy. And remember—workers' comp isn't just a legal requirement. It's protection for your employees' wellbeing and your business's financial future. When someone gets hurt, you'll be grateful you have it.
