In some states, an employer engaged in construction who has one employee is required to have workers compensation insurance. This illustrates that exemptions vary by state and industry.

• A. Retail with one employee
• B. Technology startup with contractors
• C. Nonprofit with volunteers
• D. Construction with one employee

Answer: (D)

Workers compensation obligations vary by state and by industry, not a single universal rule. This means some states require coverage for certain industries even for a very small number of workers, while others may have exemptions or different thresholds. Construction is typically viewed as high risk, so many states mandate workers compensation coverage for employers in that industry even if they have only one employee. That direct link between a high-risk industry and mandatory coverage, regardless of business size, is why the scenario with construction and one employee best demonstrates how exemptions and requirements can differ by state and industry.

The other examples don’t illustrate that variability as clearly. Retail with one employee might be exempt in some states but isn’t inherently tied to a high-risk industry, technology startups often involve contractors who may or may not be treated as workers depending on classification, and nonprofits with volunteers are frequently exempt but that hinges on volunteer status rather than the industry-state variation in coverage for a single employee.