[mynameismonkey]

It's not ridiculous, but it can be costly to document and certify in a non-standard method that upsets your routine workflow. In a larger entity, you can soak the hit and assign it to someone to deal with who maybe has some spare time or a pool of time spread across a few staff, in a smaller start-up, you may not have this flexibility. Legal adds up pretty quickly too, if they're dealing with compliance issues.

Edit: and that's just one part of a larger process for one state. I just had to have an independent contractor working in the UK apply to be registered as a valid sub contractor in NYS, and certify that he (a sole proprietor) carries adequate worker's comp... Multiply by 50 for states, throw in municipalities (I'm looking at you SF/NYC) and the feds and then add in different agencies, everyone has their own idiosyncracies. Unless you target one state, one agency, you're in for a world of pain on compliance.