No comp for undocumented workers risks perils: Legal experts

February 4, 2026

Bills in two states would restrict or restructure workers compensation benefits based on immigration status, reopening long-running debates over the scope of the workers comp “grand bargain” and raising new legal and coverage questions for employers and insurers.

Florida and New Jersey lawmakers introduced bills last month that would tighten eligibility for certain workers compensation benefits for undocumented workers or shift liability away from insurers. Similar proposals have surfaced periodically over the past decade in other states, but few have advanced into law.

Florida’s H.B. 1307 is among the most sweeping. The bill would require employers to confirm work authorization through an “E-Verify” system before submitting a workers compensation claim. If an injured worker is found to be unauthorized, employers — not insurers — would be liable for medical and indemnity costs, with insurers not liable for covering those losses.

S.B. 1521 in New Jersey would bar many undocumented workers from receiving wage-replacement benefits under workers’ compensation and temporary disability programs.

While it’s unclear whether the proposals will pass this year, lawyers and claims executives warn that restricting access to workers compensation could undermine the system’s original purpose.

“If you take away workers comp, you take away exclusive remedy,” said Jeff Adelson, a partner with Irvine, California-based law firm Bober, Peterson & Koby. “And if you take away exclusive remedy, then yes — I firmly believe they can sue.”

Workers compensation systems are embedded in state constitutions, Mr. Adelson said, and unless a constitution explicitly bars claims by undocumented workers, denying benefits risks unraveling the trade-off at the heart of the system: guaranteed benefits for injured workers in exchange for employer immunity from civil lawsuits.

This appears to be a concern industrywide, said Alan G. Brackett, a member at New Orleans-based law firm Mouledoux, Bland, Legrand & Brackett. “If you remove the remedy altogether, then there’s going to be a tort action pursued,” he said.

Narrowing eligibility also raises broader liability concerns, according to Irina Simpson, Philadelphia-based executive vice president of workers compensation at Gallagher Bassett.

“When we look at social inflation and explosive verdicts on the casualty side, workers comp has been a safety net,” Ms. Simpson wrote in an e-mail. “These changes remove that protection and predictability.”

Experts agree, however, that an undocumented worker is less likely to sue, given the current immigration climate.

Brad Young, a member at Chesterfield, Missouri-based law firm Harris Dowell Fisher & Young, said states are increasingly trying to reconcile workers compensation laws with the federal Immigration Reform and Control Act, which makes it unlawful to knowingly hire unauthorized workers.

“Immigration status has traditionally been irrelevant to whether someone was injured at work and entitled to benefits,” Mr. Young said. Courts have generally been reluctant to allow immigration law to disrupt the workers compensation compact that has existed for more than 100 years, he said.

Insurers, however, are beginning to push back, Mr. Young said, arguing that they should not be required to cover employers whose conduct violates federal law. Florida’s proposal, which preserves benefits for injured workers while shifting payment responsibility to employers, reflects that emerging compromise.

“The claimant still gets benefits,” Mr. Young said. “They just come from the employer, not the carrier.”

Mr. Brackett said it is notable that federal workers compensation systems have largely avoided immigration-status restrictions, even amid heightened national focus on illegal immigration.

“The case law under the Longshore Act has always been: If they’re your employee, you owe them benefits,” Mr. Brackett said. After major Gulf Coast hurricanes, he noted, shipyards and maritime employers saw an influx of undocumented workers and a corresponding rise in claims under the federal Longshore and Harbor Workers’ Compensation Act.

The Florida bill, placing responsibility on employers that fail to verify authorization, is “interesting,” Mr. Brackett said, but the approach still could become “very messy,” particularly if employers argue they paid premiums expecting coverage.

From a claims-handling perspective, according to Ms. Simpson, excluding undocumented workers would fundamentally change how the system operates.

Claims professionals would need new tools to identify and confirm work authorization, she wrote, shifting claims handling from an “employee-advocacy” model to a more investigative posture. Because workers compensation is state-specific, such changes also would create inconsistent protocols, exposures and compliance obligations across jurisdictions.

Removing eligibility may not reduce risk, Ms. Simpson added, but instead introduce new legal, medical and operational concerns.

“Operationally speaking, the challenges of executing a system with this level of variation and detail would be more than complex,” she wrote. “It would also invite significantly higher regulatory, governmental and public scrutiny, increasing compliance costs and ongoing legal spend.”

Workers comp was “never intended to function as an immigration enforcement mechanism,” said Margarita Santos Krncevic, of counsel at Cleveland-based firm law firm Benesch, who handles mostly employment and immigration matters.

Efforts to exclude undocumented workers have repeatedly stalled, Ms. Santos Krncevic said, in part because of the complexity of immigration status. Workers may be authorized through a range of visas or pending asylum claims, and employers often cannot reliably detect fraudulent documents.

“It’s putting an extra burden on employers to make that distinction,” she said.

If those workers are excluded from workers compensation, she said, the costs do not disappear. “They’re going to end up in emergency rooms with no insurance,” she said. “Then the question becomes: Who bears that cost?”