Is Workers' Compensation Coverage Required?
For Profit Businesses generally include, but are not limited to, sole proprietors, partnerships, LLCs, LLPs, and most corporations.
Under the Workers' Compensation Law (WCL) most individuals providing services to a for-profit business will be considered employees of that business.
An employee is a person (including family members) who performs under the supervision, direction, and control of an employer either on or off their premises. This applies whether the worker is:
- Casual/ Day Labor
- Unpaid - including volunteers and family members
These employees must be covered by the employer for workers' compensation insurance.
Workers' compensation coverage IS NOT required for partnerships, LLCs, and LLPs that do not have employees. Members and partners are not considered employees for the purposes of obtaining workers' compensation insurance, but may voluntarily cover themselves under a workers' compensation policy.
Workers' compensation coverage is not required for a sole proprietor who does not have employees. However, a sole proprietor may voluntarily cover themselves under a workers' compensation policy.
Workers' Compensation coverage is not required if the business is a one or two person owned corporation, with those individuals owning all of the stock and holding all offices of the corporation (each individual must hold an office and own at least one share of stock). Other than the corporate officer(s), there are no employees, day labor, leased employees, borrowed employees, part-time employees, other stockholders, unpaid volunteers (including family members) or subcontractors.
Workers' Compensation coverage is required if the corporation has more than two corporate officers or more than two shareholders, or where the one or two corporate officers do not own all the shares of stock (each owning at least one share).