Workers’ compensation in Arizona is mandatory. That is the general rule. All full- and part-time employees should be covered by an employer’s insurance policy. But as with all general rules, there are certain exceptions. In this article, our Arizona workers’ compensation attorneys look at some of the key exemptions. Call us if you have questions about whether you are covered.
General Rule: All Employees Are Covered
Employers purchase workers’ compensation insurance as required by law. This insurance should cover all full- and part-time employees and provide certain benefits to those injured on the job:
- Medical expenses to treat injuries
- Travel expenses related to medical treatment
- Vocational rehabilitation
- Temporary partial disability benefits
- Temporary total disability benefits
- Permanent partial disability benefits
- Permanent total disability benefits
- Death benefits
Workers should also be covered from their very first day on the job.
Sole Proprietors Are Exempt
If you are a sole proprietor, you do not need to purchase a workers’ compensation insurance policy. A sole proprietor is someone who owns their business.
However, if a sole proprietor hires an employee—even a part-time employee—then they need to purchase workers’ compensation for the worker.
If you were hired by a sole proprietor, you should be eligible for workers’ compensation benefits if you are hurt while working. That’s comforting news for workers, since thousands of people are injured on the job in Arizona each year.
What if you are a sole proprietor who purchased workers comp because you hired employees? Are you personally covered?
Actually, you are automatically exempted. But you could elect to be covered as an employee yourself. You need to indicate that you want to be covered when you apply for a policy. Shop around if you hope to be covered because not all insurers are willing to cover the owner.
Partners in a Partnership Are Exempt
A partnership is a business run by two or more partners. As with sole proprietors, partners are automatically excluded from their workers’ compensation policy, even if their workers are covered. However, the partners can elect to be covered. That’s probably a good idea, because major injuries are incredibly expensive.
Members of a Limited Liability Company (LLC) Are Not Exempt
The LLC is a popular entity formed in Arizona. It combines the ease of a partnership with limited liability protections afforded by corporations. An LLC is owned by its members, who are automatically included in the workers’ compensation policy. That’s right: they are included. However, they could choose to reject coverage in writing.
We recommend that you don’t reject coverage. The increase in premiums is more than made up for by greater peace of mind. Members, like employees, can suffer injuries at work, and an insurance policy can provide needed benefits.
Other Workers & Exemptions
Although Arizona seeks to cover every worker, there are still some other exemptions:
- Casual or occasional employees
- Intermittent employees
- Landscapers
- Gardeners
- Domestic worker employed in someone’s home
- Independent contractors
There were political reasons behind these exemptions. For example, many people want to hire a nanny but don’t want the burden of buying a workers’ compensation policy. The legislature inserted an exemption on their behalf.
The same is true for gardeners and landscapers. Many professionals want to hire these people but not have the added burden of a workers’ compensation premium.
What happens if you are working as a nanny and are injured on the job? You might be able to sue your employer for a dangerous condition. So an employer loses the protection against a lawsuit that workers’ compensation provides.
Independent Contractors & Workers’ Compensation: It’s Blurry
Now we come to the largest category of exempt workers: independent contractors. These are typically sole proprietors without employees. They typically run a business and hold themselves out to be employed by many different people. In fact, anyone with a Social Security Number can immediately begin working as an independent contractor.
All sorts of people work as independent contractors. For example, a plumber for hire is an independent contractor. Typically, he works for dozens or possibly even hundreds of people who call his office. However, if he does most of his work for one apartment complex, then it begins to look like the complex is his employer. And remember: employees must be covered.
In Arizona, whether you are truly an independent contractor depends on who has the right to control your work. A worker is an employee when the employer has the right to supervise the worker or control their method of work.
Courts look at many factors:
- Who furnishes tools or other equipment to do the job;
- The method of payment;
- The duration of any employment;
- Who has the right to hire and fire;
- Extent of ability to control the details of work;
- Whether work is performed in the usual and regular course of business.
Return to the example of a plumber. A plumber who shows up with his own tools and works his own hours unsupervised looks like an independent contractor and not an employee. By contrast, a plumber who works regular hours set by the apartment complex and is heavily supervised looks more like an employee—even if there is an agreement that he isn’t.
The independent contractor designation can matter enormously for workers’ comp purposes. Injured workers should immediately qualify for benefits, which can pay for costly medical treatment and even defray some lost wages. If a business is claiming you’re an independent contractor, don’t immediately believe them. You could qualify for workers’ comp benefits.
Do You Have Questions about Coverage?
At Snow Carpio & Weekley, PLC, we have met with thousands of injured workers over the years. We know the laws regarding workers’ compensation coverage like the back of our hands. Contact us if you have a question, (877) 370-5788.
We can help injured workers apply for benefits. We can also pull together an appeal if you were denied coverage. Call today to discuss how we charge for our services and whether you have a strong legal claim.
