The workers’ compensation system is designed to pay for the medical bills and lost income of injured employees. But while most states require all employees to be covered and all employees to carry a policy. There are exemptions. Are owners exempt from workers’ compensation? Read on to find out.
Consult top Phoenix Workers’ Compensation Attorneys if you have sustained a work injury or illness.
Who Qualifies for Workers’ Compensation Exemptions?
Most states will exempt some employees from workers’ compensation, usually due to the nature of their work. The most commonly affected workers are those who earn relatively little or work only a nominal number of days for a year, such as agricultural workers, domestic workers, and real estate agents.
Unlike employees, independent contractors don’t receive their work instructions or tools from the business owner. These workers, who are often hired to provide temporary services, are also exempt from workers’ compensation.
Besides workers, some business owners can also be exempted from workers’ compensation. Eligible candidates can opt-out of their business’s workers’ compensation coverage. Exempted business owners can also choose to opt-in for coverage.
Common business owners who may be eligible for workers’ compensation exemption include:
- Sole proprietors
- Corporate officers who own more than a certain percentage in company stocks
- Members of limited liability companies (LLCs)
Owner Exclusion Rules Vary by State
Workers’ compensation inclusion or exclusion is automatic in most states. Executive officers in a corporation, for instance, are included in the business coverage by default but can choose to opt-out of it. Partners and sole proprietors, on the other hand, are exempt by default but can opt-in for coverage.
Generally, owner exclusion rules will vary from state to state and according to ownership status. This is why owners must study state exemption rules when shopping for a workers’ compensation policy. Doing so allows them to determine their eligibility to either opt-in or out of the coverage.
How to Qualify for an Exemption
Most states have clearly-set rules about owner inclusion or exclusion in workers’ compensation. Typically, an eligible candidate will fill out a form with a regulatory agency in the state and pay a processing fee. The form, an Accord 130, should indicate your exemption preference and may need to be filled out at every renewal.
That said, you should note that you will still be required to carry a workers’ compensation cover for your non-exempt employees. Consider a business owner of an engineering firm that employs 10 technicians, 5 of whom are independent contractors and ten who are full-time employees. Their workers’ compensation obligations would be as follows:
- A sole proprietor exemption for themselves
- An exemption for the 5 independent contractors
- Workers’ compensation insurance for the other 10 technicians
Talk to a Phoenix Workers’ Compensation Attorney
The best answer to ‘are owners exempt from workers’ compensation’ is it depends. Some are, and some are not, which is why you must study exemption rules before opting out of coverage. Besides being potentially dangerous to employees, the state imposes hefty punishments for noncompliance.
The Phoenix Workers’ Compensation Attorneys at Snow, Carpio & Weekley have a combined legal experience of over 100 years. If you have any questions about what qualifies you for workers’ comp, contact us today at (877) 370 – 5788 to schedule a consultation.