Workers' Comp Insurance for Small Cleaning Businesses: What You Should Know | WIMC

March 3, 2025

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Workers' Comp Insurance for Small Cleaning Businesses: What You Should Know

Running a small cleaning business can be rewarding, but like any other business, it comes with risks. Your employees are the backbone of your company, but their health and safety can be jeopardized in the course of their duties. Cleaning tasks, while seemingly simple, often involve potential hazards that can lead to accidents and injuries. This is where workers' compensation insurance becomes essential.

If you own a small cleaning business, understanding workers' compensation insurance is critical for both the protection of your employees and your business. In this article, we’ll walk you through everything you need to know about workers' comp insurance, from what it covers and how it works to how much it costs and whether you need it for your business.

What is Workers’ Compensation Insurance?

Workers’ compensation insurance (often referred to as workers' comp) is a type of business insurance that provides benefits to employees who suffer work-related injuries or illnesses. The purpose of workers' comp insurance is to help employees recover from accidents that happen on the job, while also protecting the employer from lawsuits related to workplace injuries.

For a cleaning business, this might include injuries such as slip-and-fall accidents, repetitive strain injuries from mopping or scrubbing, chemical burns, or accidents with cleaning equipment like vacuums and buffers.

Why is Workers' Comp Insurance Important for Small Cleaning Businesses?

Workers' compensation insurance is particularly important for cleaning businesses because of the physical nature of the work involved. Cleaning employees face various risks, such as:

Slips, trips, and falls: Cleaning floors, stairs, and high surfaces increases the chances of slipping or falling.
Repetitive motion injuries: Activities like bending, reaching, or scrubbing can lead to strains, sprains, or overuse injuries.
Chemical exposure: Cleaning products can be hazardous if not used properly, potentially causing skin burns or respiratory issues.
Heavy lifting: Moving equipment or large cleaning supplies can result in back injuries or muscle strains.

These are just some of the risks that cleaning staff are exposed to on a daily basis. Workers' comp provides essential coverage for these injuries, ensuring that employees receive medical care, disability benefits, and compensation for lost wages due to a work-related accident.

Is Workers' Comp Insurance Required for Small Cleaning Businesses?

In most states in the U.S., businesses with employees are legally required to carry workers' compensation insurance. However, the specific requirements can vary by state.

For small cleaning businesses, here’s a general breakdown:

States with mandatory workers' comp: In many states, if you have employees, you must carry workers' comp insurance. This is regardless of the size of your business, so even small cleaning companies must comply if they have a single employee.
State-specific regulations: Some states may have thresholds based on the number of employees. For example, in some states, workers' compensation may be mandatory only if you have three or more employees, while others may require coverage even for one employee.
Sole proprietors and independent contractors: If you’re a sole proprietor without employees or you hire independent contractors, you might not be required to have workers' compensation. However, it’s important to note that if independent contractors are classified as employees under state law, you might be required to offer workers' comp.

Always check with your state’s department of labor or workers' compensation board to understand the specific laws and requirements for your business.

What Does Workers' Comp Insurance Cover?

Workers' compensation insurance for small cleaning businesses typically covers the following:

Medical Expenses: Workers' comp pays for necessary medical treatments related to work injuries, including hospital bills, surgery, doctor visits, medications, and physical therapy.
Lost Wages: If an employee is unable to work due to an injury, workers’ comp insurance replaces a portion of their lost income. This usually amounts to two-thirds of the employee’s regular wages.
Disability Benefits: If the injury causes long-term or permanent disability, workers’ comp can provide financial support. There are two types of disability benefits:
Temporary Total Disability (TTD): Provides compensation to employees who cannot work at all during their recovery.
Permanent Partial Disability (PPD): Pays compensation for permanent impairments that don’t entirely disable an employee.
Rehabilitation Costs: Workers’ comp may cover the costs of rehabilitation programs, including physical therapy and retraining if the employee is unable to return to their original position.
Death Benefits: If an employee dies as a result of a workplace injury or illness, workers' compensation insurance provides compensation to the employee’s dependents, including funeral expenses and ongoing support.

How Much Does Workers' Comp Insurance Cost for Small Cleaning Businesses?

The cost of workers' compensation insurance depends on several factors, including the size of your business, the number of employees, the industry you operate in, and the overall risk profile of your business. Small cleaning businesses typically face moderate insurance costs due to the physical nature of their work.

Here are some key factors that affect the cost:

Employee Classification: Insurance companies classify workers into categories based on the type of work they do. For example, a janitor or cleaner might fall under a category that’s considered higher risk compared to office workers, leading to a higher premium.
Payroll Size: Workers' comp premiums are often calculated based on the total payroll of your employees. The higher your payroll, the higher your premium is likely to be.
Claims History: If your business has a history of frequent or expensive claims, your premiums may increase. However, maintaining a clean safety record and implementing safety programs can help keep costs down.
State Regulations: Since workers' comp is regulated at the state level, the rates can vary widely by location. States with higher rates of injury or larger administrative costs may have higher premiums.

On average, small cleaning businesses can expect to pay between $0.75 to $3 per $100 of payroll. So, if you have a payroll of $100,000, your annual premium might range from $750 to $3,000. The exact amount will depend on the factors mentioned above.

How to Save on Workers' Compensation Insurance for Your Cleaning Business
While workers' comp insurance is an essential cost for your cleaning business, there are several ways to minimize the premium:

Implement a Strong Safety Program: Invest in training your employees on workplace safety, proper equipment use, and the handling of hazardous chemicals. The fewer accidents you have, the lower your premiums may be.
Classify Employees Correctly: Ensure that your employees are correctly classified by your insurance provider. Misclassifying an employee in a high-risk category can lead to higher premiums.
Shop Around for Quotes: Different insurance companies may offer different rates, so it’s worth shopping around and comparing quotes from multiple providers.
Consider a Pay-As-You-Go Plan: Some insurance providers offer pay-as-you-go workers’ compensation, where premiums are based on actual payroll numbers rather than estimated totals. This can help small businesses better manage cash flow.
Review Your Coverage Regularly: As your business grows, be sure to review your workers' comp policy to ensure it’s still adequate for your needs.

Common Myths About Workers' Comp Insurance for Cleaning Businesses

There are a few myths about workers' compensation insurance that might cause small cleaning business owners to hesitate in getting coverage:

Myth: I don’t need workers' comp if I only have a few employees.

Fact: Workers' comp is often mandatory, regardless of how many employees you have. Even one employee might require coverage, depending on your state’s laws.

Myth: Workers' comp only covers injuries from accidents.

Fact: Workers' comp can cover a range of work-related injuries and illnesses, including repetitive stress injuries, chemical burns, and illnesses related to exposure to cleaning agents.

Myth: Workers' comp is too expensive for small businesses.

Fact: While the cost varies, workers' comp is often more affordable than many business owners think, especially when considering the potential costs of handling workplace injuries out of pocket.

Myth: Workers' comp claims will automatically raise my premiums.

Fact: While multiple claims may increase your premiums, insurance companies take other factors into account, such as your overall safety record and risk profile.

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