State-mandated insurance that pays medical bills and lost wages when an employee is hurt on the job.
Workers' comp is the no-fault insurance that covers your employees if they're injured at work. It pays for medical care, partial lost wages, and rehabilitation. In return, employees give up the right to sue you over the injury.
Almost every state requires it the moment you have W-2 employees — sometimes from your very first hire. Sole proprietors and 1099 subcontractors typically aren't required to carry it on themselves, but smart GCs require their subs to either carry comp or sign a waiver.
Premiums are calculated from your payroll and your trade's risk classification. Higher-risk trades (roofing, demo) pay much higher rates than lower-risk trades (painting, finish carpentry).