Monopolistic Workers' Comp States: What General Contractors Need to Know

TL;DR: Four states require workers' comp exclusively through a state-run fund: North Dakota (WSI), Ohio (BWC), Washington (L&I), and Wyoming (Department of Workforce Services). An ACORD 25 certificate cannot prove coverage in any of them, so GCs must verify directly via the state portal (BWC certificate lookup, L&I "Verify a Contractor," or a WSI Certificate of Premium Payment) before letting subs work in those jurisdictions.

If you're a general contractor working in North Dakota, Ohio, Washington, or Wyoming, or you hire subs who work in those states, there's a critical quirk in Workers' Compensation law that trips up GCs coming from other states: these four states are monopolistic. That means private Workers' Comp insurance is not available or not valid for employers in those states. All Workers' Comp must be purchased from the state-run fund.

If you're used to verifying a sub's COI for WC coverage, and that's how you've always done it, you need to know that in these four states the verification process is completely different, and the standard COI doesn't help you.

This post covers what monopolistic states are, which states they are, how to verify coverage, and how to keep subs compliant when they work across state lines.

What Does "Monopolistic" Mean?

In most US states, employers can choose between multiple Workers' Comp options: private insurance carriers, self-insurance (for large employers who qualify), or. In some states. A state-run fund as a backup option. Private carriers compete for business, produce Certificates of Insurance, and the standard ACORD 25 form is how you verify coverage.

In a monopolistic state, there's no choice. Workers' Comp must be purchased from a single, state-run fund, and private carriers are prohibited from writing Workers' Comp in that state. The state fund is the only option, and compliance is verified through the state fund's records rather than through an ACORD 25 COI.

The Four Monopolistic States (and a Note About Two Others)

North Dakota: Workforce Safety & Insurance (WSI)

All employers operating in North Dakota must purchase Workers' Comp through Workforce Safety & Insurance (WSI). Verification is done by requesting a Certificate of Premium Payment or by checking the employer's WSI account status online through the WSI employer portal.

Ohio: Bureau of Workers' Compensation (BWC)

Ohio's Bureau of Workers' Compensation (BWC) is the sole source of Workers' Comp insurance for Ohio employers. Verification is done through the BWC's online certificate of coverage lookup tool. You enter the sub's business name or federal ID and see their current coverage status.

Washington: Department of Labor & Industries (L&I)

Washington's Department of Labor & Industries (L&I) operates the state Workers' Comp fund. Employers register with L&I and pay premiums quarterly. Verification is done through L&I's online "Verify a Contractor" tool, which shows contractor registration, bonding, and Workers' Comp account status all in one place.

Wyoming: Department of Workforce Services

Wyoming Workers' Comp is administered by the Wyoming Department of Workforce Services. Coverage is mandatory for employers in designated "extra-hazardous" industries (including construction) and optional for others. Verification is through the department's online employer account lookup.

Two Honorable Mentions: Puerto Rico and US Virgin Islands

Puerto Rico's State Insurance Fund Corporation and the Virgin Islands' Government Insurance Fund both operate similarly to monopolistic state funds. If you're working in US territories, the same principles apply.

Former Monopolistic States

Historically, a handful of other states were monopolistic and transitioned to competitive markets. The most recent was Nevada, which transitioned in 1999. If you find older reference materials citing other states as monopolistic, check the current status. Monopolistic lists are out of date if they include anything outside of ND, OH, WA, WY.

Why This Matters for GCs

Three practical problems.

Problem 1: The COI Doesn't Show WC in These States

If a sub based in Ohio gives you a standard ACORD 25 COI, the Workers' Comp line will be blank, or it may show a "stop gap" employer's liability policy. Because Ohio Workers' Comp is purchased from the BWC rather than a private carrier, the COI form isn't designed to display state-fund coverage.

A GC used to looking at the WC line on the COI will see the blank and either:

(a) Assume the sub has no Workers' Comp and reject the sub. Wrong, they're likely fully compliant through BWC. (b) Miss the gap and assume everything is fine. Also wrong, because you didn't actually verify BWC coverage exists.

The right response: don't rely on the COI for WC verification in monopolistic states. Go to the state fund's online portal instead.

Problem 2: Cross-State Workers and Extraterritorial Coverage

Say a sub based in Ohio takes a job in Kentucky. A state right next door with a competitive WC market. Ohio BWC coverage is primary for the sub's Ohio-based employees, but it doesn't automatically cover them when they cross state lines into Kentucky for work.

Most subs operating across state lines in these situations purchase a "stop-gap" employer's liability policy through a private carrier to cover Ohio-based employees working in other states, plus to fill gaps where BWC coverage doesn't extend. This policy will show on the ACORD 25 COI under Employer's Liability and is important to verify.

For cross-border work, you often need both:

• The state fund coverage (verified through state portal)
• The stop-gap / extraterritorial policy (verified through COI)

Problem 3: Out-of-State GCs Working in a Monopolistic State

If you're a GC based outside a monopolistic state but you take on a project inside one, your employees working in that state need coverage from the state fund. Even temporarily. Your existing private Workers' Comp policy generally will NOT cover your employees while they're working in North Dakota, Ohio, Washington, or Wyoming.

You have two options:

1. Open an account with the state fund and pay premiums on your in-state payroll. This is the proper long-term solution for anything more than a short visit.
2. Purchase an "other states" or "stop-gap" endorsement on your home policy that provides coverage when working temporarily in monopolistic states. Check with your broker. This may provide limited protection for short assignments but won't satisfy state registration requirements for longer work.

Verification Tools by State

State	Verification Tool	URL Pattern
North Dakota	WSI Employer Portal	workforcesafety.com
Ohio	BWC Certificate Lookup	bwc.ohio.gov (Find a Policy / Prove Coverage)
Washington	L&I Verify a Contractor	secure.lni.wa.gov/verify
Wyoming	DWS Employer Lookup	wyomingworkforce.org

For each sub working in one of these states, you should:

1. Visit the state portal
2. Look up the sub by business name or federal ID
3. Verify active Workers' Comp account with current premium payment
4. Screenshot or download the verification page as documentation
5. Store alongside the sub's other compliance documentation

This is not optional. In a claim scenario, "the sub told me they had coverage" will not protect you. State portal verification is your proof.

Common Mistakes GCs Make

1. Relying on the COI's WC line in monopolistic states. It's blank for a reason. Use the state portal.
2. Assuming a sub from Ohio has "private" WC. They don't, or if they do, it's a stop-gap policy, not full WC coverage.
3. Not re-verifying periodically. Subs can fall behind on state fund premiums, which can cause coverage to lapse. Verify at project start, then every 90 days thereafter.
4. Missing the cross-border scenario. Subs who work across state lines need both state fund coverage AND stop-gap. Verify both.
5. Forgetting to register your own company. If you work on a project in a monopolistic state and your own employees are on site, you need a state fund account for that payroll.

How PaperBoss Handles Workers' Comp Tracking

PaperBoss supports Workers' Comp verification across all 50 states, including monopolistic states. For subs in ND, OH, WA, and WY, you upload the state fund verification document (Certificate of Premium Payment from WSI, Certificate of Coverage from BWC, L&I verification screenshot, etc.) the same way you'd upload a COI. PaperBoss tracks it, flags when it needs re-verification, and includes it in compliance reports.

For each state in our state-by-state compliance guides, we note whether the state is monopolistic and what verification tool applies.

Start a 14-day free trial, no credit card required.

Frequently Asked Questions

Can a contractor in a monopolistic state buy supplemental private Workers' Comp coverage?

Yes. Subs often buy a "stop-gap" Employer's Liability policy from a private carrier to cover gaps (lawsuits from injured employees that fall outside the state fund's benefits, out-of-state worker coverage, etc.). This appears on their COI as Employer's Liability.

Is Texas a monopolistic state?

No. Texas is actually the opposite. It's the only state where Workers' Comp is optional for most employers. Texas subs can legally choose to be non-subscribers, which has different risk implications. Don't confuse "monopolistic" with "mandatory". Those are different concepts.

What if a sub is a sole proprietor with no employees in a monopolistic state?

In most monopolistic states, sole proprietors with no employees can opt out of Workers' Comp coverage. They may not have a state fund account at all. In that case, ask for a signed Workers' Comp exemption form from the sub and verify their employee status through your contract.

Does a monopolistic state affect the 1099 rules?

No. 1099 filing requirements are federal and don't vary by state. Workers' Comp is separate from tax filing.

If I verify coverage once, am I covered for the whole project?

No. Coverage can lapse for non-payment of premiums. Re-verify at least quarterly for long-running projects, and always before a new phase or major scope change.

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This article is for educational purposes only and does not constitute legal or insurance advice. Consult a construction insurance broker familiar with the specific monopolistic state for guidance on your situation.