Reducing Risk: State Approaches to Insurance and Liability in Work-Based Learning

It’s a story as old as time—or at least as long as work-based learning programs have been trying to place high school students in on-the-job training. Employers appear interested in hosting or hiring students in work-based learning programs, only to bail once their legal department gets wind of the new partnership.

In many cases, those concerns can be resolved with the right information and a bit of persistence. When New America hired a youth apprentice through CityWorks DC's CareerWise program in 2024, our Chief Operating Officer worked with legal counsel to confirm that, despite initial assumptions, our liability policy did allow us to employ minors without a rate increase. Resolving the issue required direct conversations with our insurance carrier and clarification that, as a Registered Apprentice, our youth apprentice is by definition an employee and is therefore covered by our workers’ compensation policy under DC law.

While our situation at New America was resolved within a few weeks, many employers do not have the time or capacity to navigate these questions on their own. Work-based learning program leaders can help, but many are uncertain themselves. Requirements vary across states and insurance carriers—not to mention work-based learning types (e.g., paid vs. unpaid programs)—creating additional complexity for everyone involved. Part of the challenge is simply understanding which insurance applies—and when.

Businesses typically carry liability insurance to protect themselves against claims related to physical injuries, property damage, and reputational risk. Many states require businesses in certain industries to carry liability insurance (e.g., contractors or real estate agents) or require businesses above a certain size to do so, but no state imposes a blanket requirement that all businesses must carry liability policies. If a local business hosts a class of tenth graders for a site visit and a student slips and breaks his wrist while on-site, that business could lean on its liability insurance to cover costs related to that incident if the business were determined to be in some way at fault. The student would also likely be covered in this instance by liability insurance held by his school district, although, again, state requirements and individual policies vary.

Unlike liability insurance, workers’ compensation insurance is required in 49 states and DC. Only Texas does not require private businesses to provide it. Workers’ compensation insurance covers costs incurred due to work-related injuries for employees. States impose different requirements for these policies. For the purposes of work-based learning, a key issue is how broadly the term “employee’’ is defined. For example, while most states consider paid interns to be employees for the purposes of eligibility, New York requires that employers’ workers’ compensation benefits apply to both paid and unpaid interns. In Iowa, unpaid work-based learning students can be covered under the workers compensation policy of their school district or college; when students are in paid work-based learning roles, employers are responsible for providing the coverage.

In many cases (like New America’s), businesses already carry coverage that provides adequate protection to host work-based learning students, but are unaware of that flexibility. This uncertainty increasingly shifts the burden of interpretation onto program leaders, who must help employers navigate insurance and workers’ compensation requirements on a case-by-case basis. Doing so can be time consuming, posing a real barrier to the expansion of work-based learning programs. Recognizing this, several states have begun taking more systematic approaches to addressing employers’ most persistent insurance-related concerns. Here are three common approaches.

Offer Clear Guidance

To tackle myths about workers’ compensation eligibility for youth apprentices in Kansas, the Office of Registered Apprenticeship cooperated with the Kansas Department of Insurance to issue a letter (see page three) that explains, in no uncertain terms, that “KDOI has not identified any statutory or regulatory barriers in obtaining workers compensation for registered apprentices,’’ including those under 18. The letter goes on to explain an important fact about workers’ compensation insurance that applies in Kansas and across the U.S.: Age is not typically used as a factor in determining businesses’ workers’ compensation rates, which means hiring minors should not drive up costs, despite persistent myths.

The letter has been shared widely with education partners leading the charge to build youth apprenticeship programs and recruit employers to hire their students with positive results.

More broadly, school districts and employers often struggle to understand how state laws and regulations apply across different forms of work-based learning. Apprenticeship is relatively straightforward because it is a formally defined model in which apprentices are considered employees. Other experiences, such as job shadows or short-term internships, are less clear cut. Even within a state, requirements can vary based on factors like the location where the work is performed, the duration of the engagement, and whether a student is paid. Recognizing this, both Montana and Nebraska provide easy-to-read guides that break down requirements by different work-based learning opportunities available to students and employers.

Bolster Coverage for Districts

In many states, because work-based learning experiences are considered an extension of classroom learning, most students are protected by the school district’s liability policies. Often, especially in cases where their work-based learning experiences are paid, students are covered by employers’ workers’ compensation insurance policies.

In the last decade, a handful of states including Nevada and Oklahoma have adopted legislation explicitly allowing school districts to purchase additional or specific liability coverage for students in work-based learning programs including, at least in Oklahoma’s case, those who are paid. Legislation in Iowa allows school districts to cover some students through their own workers’ compensation policies, as noted above. While these policies may create some redundancies with employers’ own policies, they ensure students are fully covered, and may also reduce the need for district- and school-based program leaders to verify coverage provided for every individual employer partner.

Reduce Cost to Employers

Rather than shifting coverage responsibility to districts, some states have taken steps to reduce insurance-related costs borne by employers involved in work-based learning programs.

In 2017, Texas passed legislation (HB 639) authorizing public schools to purchase liability and accident insurance that covers both students and employers participating in work-based learning and CTE programs. The policy was an attempt to make participation more feasible for employers who feared exposure or potential rate hikes due to having minors in workplaces.

The year prior, legislators in Georgia passed the Work Based Learning Act (HB 402) allowing businesses hiring high school students through state-sanctioned work-based learning programs to receive 5 percent discounts on their workers’ compensation premiums, ostensibly offsetting any real or perceived cost increases incurred as a result of participation. The Georgia Department of Education’s employer-facing “Explainer’’ provides useful details on the policy, including guidance on how employers should code work-based learning students on workers’ compensation reports, should the need arise.

It’s difficult to assess if these policies have been successful at lowering barriers to employers’ participation in work-based learning, but anecdotal evidence suggests most have been well-received. As states consider how to address work-based learning liability concerns, it’s important to first diagnose the source and scope of the real issue. Are employers simply unaware of existing flexibility, or is there truly a barrier in legal requirements or insurance markets? Any policy response should prioritize the interests and safety of work-based learning students first and foremost, while seeking to distribute the costs and risks across schools, employers, and other stakeholders who benefit from these growing programs.

A final note: It’s also important to acknowledge that state and federal child labor laws—while not the focus of this blog—are a critical and complex part of work-based learning policy. These laws exist to protect young people’s safety and well-being, and they must be carefully understood and followed. Failure to comply can jeopardize insurance coverage and create serious liability risks for both students and employers. We’ll discuss child labor law issues in a future post, but encourage you to consult the U.S. Department of Labor and your state’s labor, employment, or workforce agency for up-to-date guidance and information.