Hiring Holiday Help? What Indiana Workers' Compensation Law Requires of Small Employers

Key takeaways

• Indiana requires nearly every employer to carry workers' compensation insurance — there is no minimum number of employees. One part-time seasonal hire is enough to trigger the requirement unless a specific exemption applies.
• Holiday help is not "casual labor." Indiana's casual-worker exclusion only applies when work is both casual and outside the usual course of your business. A retailer hiring extra sales help for December is hiring in the usual course of business.
• Operating without coverage is a Class A infraction in Indiana, with fines of up to $10,000, possible liability for up to double the compensation owed, and a possible order to close the business until coverage is in place, according to the Indiana Compensation Rating Bureau.
• Seasonal payroll shows up at audit. Workers' comp premiums are generally calculated per $100 of payroll, estimated at the start of the policy and trued up afterward — so adding holiday help without telling your agent tends to become a bill later, not a saving.

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What's in this guide

1. What workers' compensation insurance is
2. Why it matters for Indiana small businesses this season
3. Who has to carry it in Indiana — and the narrow exceptions
4. Seasonal and part-time workers: what changes when you add holiday help
5. Employees vs. independent contractors
6. What workers' comp pays when someone gets hurt
7. A pre-holiday checklist for Indiana employers
8. Frequently asked questions

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It's the second week of December. You own a gift shop on a downtown square somewhere in Indiana, and for the first time you hired two part-timers for the holiday rush — college students home on break, twenty hours a week each, through New Year's.

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On a Saturday morning one of them carries a box of inventory in from the back lot, slips on a patch of ice by the door, and lands hard on a wrist. By Monday there's an urgent care bill, an orthopedic referral, and a question you didn't expect to face: whose insurance pays for this?

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If your answer is "the workers' comp policy I set up for my two full-time employees," you're probably in good shape — as long as the new hires were counted. If your answer is "I didn't think I needed workers' comp for temporary help," this article is for you, ideally before December.

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What is workers' compensation insurance?

Workers' compensation insurance pays for medical care and a portion of lost wages when an employee is injured or becomes ill because of their job — and in Indiana, carrying it (or qualifying to self-insure) is a legal requirement for nearly every employer.

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The system is a trade. Employees get medical care and wage benefits for work injuries without having to prove the employer was at fault. Employers get a predictable, insurable way to meet that obligation. The policy is the mechanism that makes the trade work: when an employee is hurt on the job, the claim goes to the insurer, not to the owner's checking account.

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For a small business, workers' comp is usually one of the first policies required once you have anyone on payroll, separate from general liability and commercial property coverage. Our complete guide to small business insurance in Indiana covers how it fits alongside the rest of a business insurance program.

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Why it matters for Indiana small businesses this season

The holiday season concentrates three risks into a few weeks: more workers, newer workers, and worse conditions.

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More workers. The National Retail Federation forecast that retailers would hire between 265,000 and 365,000 seasonal workers from November 1 through December 31, 2025 — the lowest level of seasonal retail hiring in 15 years, but still hundreds of thousands of people starting new jobs in the same eight weeks. Restaurants, shipping, and trades add their own seasonal hiring on top.

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Newer workers. A seasonal hire is, by definition, new. They don't know where the step stool is, which part of the back lot ices over first, or how heavy the boxes from a particular supplier are. [client's take: Lee — a sentence on what you see most often in first-month injury claims, without naming any client.]

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Worse conditions. Indiana winter arrives during peak season. Ice at the loading door, wet floors at the entrance, ladders in stockrooms, and long days on concrete are all ordinary December conditions.

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And the cost of getting it wrong is high. According to the Indiana Compensation Rating Bureau, failing to carry required coverage is a Class A infraction under Indiana Code 22-3-5-1, and the consequences can include:

• a fine of up to $10,000;
• liability for compensation not to exceed double what the law would otherwise provide, plus medical expenses and reasonable attorney fees; and
• an order to close the business until proof of insurance is provided.

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Separately, the Workers' Compensation Board of Indiana can assess a civil penalty of $100 per day against an employer that fails to provide current proof of coverage within 10 days of the Board's request.

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Put those next to the typical cost of covering a few seasonal part-timers — which we'll walk through below — and the math isn't close.

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Who has to carry it in Indiana — and the narrow exceptions

Indiana's rule is broad. The Workers' Compensation Board states that every employer covered by the act, except those exempted, must either obtain insurance or demonstrate the financial ability to pay compensation directly (self-insurance, which is realistic mostly for large employers). There is no employee-count threshold — the requirement applies whether you have one employee or a hundred, full-time or part-time.

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The exceptions are narrow and specific. Under Indiana Code 22-3-2-9, the act does not apply to:

• Casual laborers — but only in a limited sense. Indiana Code 22-3-6-1 excludes someone "whose employment is both casual and not in the usual course of the trade, business, occupation, or profession of the employer." Both conditions have to be true.
• Farm or agricultural employees.
• Household employees.
• Part-time youth coaches working as independent contractors for a qualifying nonprofit.

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Why holiday help usually isn't "casual." This is the misunderstanding worth clearing up. A bakery hiring extra counter staff for Thanksgiving pies, a retailer adding weekend sales help for December, and a landscaper hiring a crew for holiday lighting installs are all hiring people to do the business's ordinary work. The job may be temporary, but it's squarely in the usual course of the business. Temporary is not the same as casual.

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Owners are treated differently depending on how the business is organized. Under Indiana Code 22-3-6-1:

• Sole proprietors and partners are not automatically covered as employees, but may elect to include themselves.
• LLC members and managers may also elect coverage.
• Corporate executive officers are employees by default, but may elect not to be covered by giving written notice to the insurer and the Board.

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None of these owner elections changes the rule for your employees. If you're a sole proprietor with no employees, you may not need a policy at all. The day you hire your first seasonal part-timer, that changes.

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Seasonal and part-time workers: what changes when you add holiday help

Seasonal and part-time employees are covered the same way as year-round staff. What changes is your payroll — and payroll is what drives workers' comp premium.

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How premium is generally calculated. Workers' comp premium is commonly figured with a formula along these lines: classification code rate × experience modification × (payroll ÷ $100). Each job type has a classification with its own rate, based on how risky that kind of work is. Your experience modification adjusts the premium up or down based on your claims history. And payroll is the base the rate is applied to.

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Estimated at the start, trued up at the end. At the start of the policy, you estimate your payroll for the year and pay premium on that estimate. After the policy period ends, the insurer audits actual payroll. If you paid less in wages than estimated, you may get money back; if you paid more, you owe the difference. The ICRB notes that insurers may audit records within three years after the policy period ends.

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A worked example, with illustrative numbers. Say you add two seasonal part-timers at $15 an hour, 20 hours a week each, for eight weeks:

• 2 workers × 20 hours × $15 × 8 weeks = $4,800 of added payroll
• $4,800 ÷ 100 = 48 units of payroll
• At a purely illustrative rate of $1.50 per $100 of payroll with a neutral experience mod of 1.00, that's 48 × $1.50 = $72 of added premium

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Your real rate depends on your classification, your carrier and your history — retail and office classes typically carry much lower rates than roofing or trucking — so treat the $1.50 as a placeholder, not a quote. The point is the shape of the math: for a small seasonal crew, the added premium is usually modest and proportional to the wages you pay.

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Now compare the alternative. If one of those two workers is hurt and you're uninsured, you may be personally responsible for their medical bills and wage benefits — potentially up to double, plus the Class A infraction exposure described above.

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Two practical points about seasonal payroll:

1. Tell your agent before the season, not at audit. Updating your payroll estimate spreads the cost across the policy period instead of landing as a single audit bill in the spring.
2. Keep payroll records by job type. If your seasonal hires do different work than your regular staff — warehouse lifting versus cashiering, say — separate records help the audit apply the right classification to each.

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Summer is the other big seasonal-hire window for many Indiana businesses; our guide to Indiana's summer business season covers the festival-and-seasonal-staff side of the calendar.

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Employees vs. independent contractors

Some owners try to avoid the question by paying seasonal help as independent contractors. It's worth understanding why that often doesn't work.

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The test isn't what you call them. Indiana law treats a person as an independent contractor for workers' comp purposes if they qualify as one under IRS guidelines. And the ICRB is clear on who decides: only the Workers' Compensation Board of Indiana and the Indiana courts can determine whether a worker is an independent contractor or an employee.

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What the ICRB describes as typical of each:

• Independent contractors generally direct their own work, set their own hours, provide their own tools, are paid by the job rather than by the hour, and can work for multiple businesses.
• Employees generally work under the employer's control, have taxes withheld, work specified hours, and receive the employer's training and equipment.

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A seasonal cashier who works the hours you schedule, at your register, trained by you, paid hourly, looks like an employee under that description regardless of what the paperwork says.

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Contractors you hire bring their own question. If you hire an outside business — a crew to install holiday lighting, a snow-removal contractor — ask for a certificate showing they carry their own workers' comp. The ICRB notes that a standard policy lets your insurer charge you premium for people who "could make us liable" for workers' comp benefits unless you give proof that their employer secured its own coverage, and that a general contractor is ultimately liable for workers' comp benefits owed to any uncovered worker on the job.

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The independent contractor certificate. Indiana has a process for independent contractors to obtain a certificate of exemption through the Department of State Revenue; the Workers' Compensation Board lists the filing fee as $15 with the certificate filed, plus $5 to the Department of Revenue. A certificate documents the contractor's status — it isn't a way to convert employees into contractors.

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What workers' comp pays when someone gets hurt

Understanding what the coverage does helps explain why the requirement exists.

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Medical care. Workers' comp pays for medical treatment that's reasonable and necessary for a work-related injury or illness. According to Nolo's summary of Indiana benefits, that treatment comes without co-pays or deductibles for the employee.

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Wage replacement. When a work injury keeps an employee off the job, Indiana temporary total disability benefits are generally two-thirds of the employee's average weekly wage, up to a maximum set by statute. Benefits generally aren't paid for the first seven days of disability unless the disability lasts more than 21 days.

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Reporting obligations. Indiana employers must report injuries to their insurer, and must report to the Board injuries that cause an employee to miss a day of work; the ICRB describes failure to report as a Class C infraction under Indiana Code 22-3-4-13. That's another reason to know, before the season starts, exactly who you call and what form you file.

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Back to the gift shop. In the scenario at the top, the wrist injury on the icy back step is a textbook workers' comp claim: an employee, doing the job, hurt on the premises. If the seasonal hire was on the policy's payroll estimate, the claim goes to the insurer. If the business had no policy, the owner is facing those costs directly — plus the penalties.

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Employees who drive for the business — delivering orders, running to the bank, picking up supplies — raise a related question about vehicle coverage. Our guide to commercial auto insurance in Indiana covers that side.

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A pre-holiday checklist for Indiana employers

Most of this takes an afternoon. Do it before the first seasonal hire starts.

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1. Confirm your policy is active. Find your current workers' comp policy and check the dates. The Workers' Compensation Board points employers and others to an online tool, "Confirm Employer's Worker's Comp Coverage," at ewccv.com, where you can check what's on record.

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2. Update your payroll estimate. Call your agent with a rough number: how many seasonal hires, roughly how many hours, at what wage, for how long. Better now than a surprise at audit.

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3. Classify each role accurately. If seasonal workers do different work than your year-round staff, say so. If you're considering paying anyone as a contractor, run them against the characteristics above first.

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4. Collect certificates from outside contractors. Snow removal, holiday lighting, delivery services, event setup — get a certificate of insurance before they start.

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5. Post the required notice. Indiana employers are expected to post notice of their workers' comp coverage where employees can see it. Check that yours is current and visible, including anywhere seasonal staff work.

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6. Set an injury-reporting routine. Write down, in one place, who a hurt employee tells, who calls the insurer, and how you'll report to the Board if an injury causes a missed day. Put it where a new hire and a shift lead can both find it.

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7. Walk the building for December hazards. Ice-prone doorways, the stockroom ladder, the heaviest boxes, the busiest aisle. Ten minutes of fixes — a mat, a salt bucket by the back door, a second step stool — prevents the most common first-month injuries.

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8. Keep clean payroll records through the season. Hours, wages and job type for every seasonal worker, kept together, make the eventual audit quick.

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A quick comparison: who's covered on your policy?

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     Worker type | Generally covered by your Indiana workers' comp? | What to do

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Full-time employee | Yes | Keep payroll estimate current

Part-time employee | Yes — no hours threshold | Include in payroll estimate

Seasonal / temporary employee you hire directly | Yes — temporary is not "casual" when the work is your usual business | Tell your agent before the season

Temp worker supplied by a staffing agency | Often covered by the agency's policy — confirm | Ask the agency for a certificate of insurance

Outside contractor's crew (snow removal, lighting) | Their employer should cover them | Get a certificate before work starts; uncovered workers can end up on your audit

Independent contractor (meets IRS guidelines) | Generally not an employee under the act | Only the Board and courts decide status — classify carefully

Sole proprietor or partner (owner) | Not automatically; may elect coverage | Decide whether to elect

Corporate executive officer | Yes by default; may reject in writing | Written notice to insurer and Board if rejecting

Household or farm employee | Excluded under IC 22-3-2-9 | Confirm the exclusion fits the actual work

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The bottom line

The bottom line is simple: in Indiana, if someone is on your payroll doing your business's work, plan on them needing workers' comp coverage — whether they work forty hours a week year-round or twelve hours a week for six weeks in December.

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The fix is rarely complicated. Confirm your policy is active, tell your agent about the seasonal payroll before it happens, collect certificates from outside contractors, and write down what everyone does if someone gets hurt. That's an afternoon of work against a Class A infraction, a potential double-compensation award, and a closure order.

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If you'd like help reviewing your business coverage before the holiday rush, contact the AOG Group team or call us at 317-981-2046. You can also read more about how we approach small business insurance. We work with small businesses across Indiana, and a pre-season review is one of the most useful half-hours an owner can spend.

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This article is general information, not legal advice, and does not state what any particular policy covers or whether any business or worker is eligible for coverage. Workers' compensation obligations depend on your business structure, the work performed, and applicable Indiana law; coverage and premium are determined by the terms of your own policy and your carrier's underwriting. Rates used in the example are illustrative only.

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About the author

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Lee Boyer is a licensed Property & Casualty and Life & Health insurance agent with more than seven years at Allstate, all of them inside the AOG Group agency in Indiana. He writes about coverage the way he explains it at his desk — in plain English, without the sales pitch.

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Sources

• Workers' Compensation Board of Indiana — Compliance (employers must insure or self-insure unless exempted by IC 22-3-2-5; $100/day penalty for failing to provide proof within 10 days under IC 22-3-5-2.5; independent contractor certificate of exemption filing fee; coverage verification at ewccv.com) · https://www.in.gov/wcb/compliance · accessed September 30, 2026
• Indiana Compensation Rating Bureau — Workers Compensation Requirements and Penalties (IC 22-3-5-1 Class A infraction; fine up to $10,000; up to double compensation; closure until proof of insurance; IC 22-3-4-13 reporting, Class C infraction) · https://www.icrb.net/references/workers-compensation-requirements-and-penalties/ · accessed September 30, 2026
• Indiana Compensation Rating Bureau — Employee or Independent Contractor (IRS-guideline test; only the Board and courts decide status; premium for uninsured subcontractors; GC liability; audits within three years) · https://www.icrb.net/references/employee-or-independent-contractor/ · accessed September 30, 2026
• Indiana Code 22-3-2-9, via Justia (exempt employments: casual laborers, farm or agricultural employees, household employees, part-time youth coaches) · https://law.justia.com/codes/indiana/title-22/article-3/chapter-2/section-22-3-2-9/ · accessed September 30, 2026
• Indiana Code 22-3-6-1, via Justia (casual employment "both casual and not in the usual course"; elections for sole proprietors, partners, LLC members; corporate officers may reject) · https://law.justia.com/codes/indiana/title-22/article-3/chapter-6/section-22-3-6-1/ · accessed September 30, 2026
• OnPay — Guide to Indiana workers' compensation requirements for employers (no employee-count threshold; posting requirement) · https://onpay.com/insights/workers-comp-requirements-by-state/indiana/ · accessed September 30, 2026
• ADP — How is workers' comp calculated? (premium formula; estimated payroll and year-end audit) · https://www.adp.com/resources/articles-and-insights/articles/h/how-is-workers-comp-calculated.aspx · accessed September 30, 2026
• Nolo — How Much Are Workers' Compensation Benefits in Indiana? (two-thirds of average weekly wage; seven-day waiting period unless disability exceeds 21 days; medical care without co-pays or deductibles) · https://www.nolo.com/legal-encyclopedia/how-much-are-workers-compensation-benefits-in-indiana.html · accessed September 30, 2026
• CBS News — Seasonal retail jobs are set to drop to lowest level in 15 years (NRF forecast of 265,000–365,000 seasonal hires, Nov 1–Dec 31, 2025) · https://www.cbsnews.com/news/employment-retail-seasonal-jobs-hiring-lowest-in-15-years/ · accessed September 30, 2026