Workmans Comp Exemption

Workers compensation benefits are given to employees, but there are certain people automatically exempted from receiving benefits. Find out how.

It is important for businesses and employers to give fair compensation to their workers. Some nature of jobs require physical strength which also invites bodily injuries and health concerns. To compensate for this loss, many business owners proceed to an insurance company to have all these health measures checked: to get their employees insured under the worker’s compensation belt.

What is Workers’ Compensation?

A worker’s insurance compensation in the USA is typically referred to as work comp cover, which is basically protection given to employees if they get injured or sick because of their job. Whatever the legal requirement and laws may be in your country, keeping those in mind the work comp covers employee sickness and health if it has been affected due to the nature of the work.

Naturally employees won’t be covered if they are injured or sick because of their own negligence such as alcohol consumption or drug intoxication. Moreover employee misconduct is also often not covered in this type of insurance, where an employee would knowingly violate the law or the policy.

How does Workmans Comp work?

Workman’s comp insurance policy is purchased by businesses and employers, aimed at providing protection to employees. Workmans comp works when employees report about the incident or their injury to their employer, and then the employer fills up formalities to see how it would cover the employee.

There are however certain exceptions as well, as to what a workmans comp will cover and what it will not cover as part of the policy plan.

Workers Compensation Insurance covers:

  • Employee death: If an employee dies while on duty or their cause of death is the job, then the beneficiaries will receive monetary compensation under the insurance. This will also cover any funeral or burial costs.
  • Injuries: Any injuries caused by the job are covered. Let’s say an employee is working in the copy room and is required to pull down files from the top cabinet. While doing so if he falls down the ladder and fractures his leg, he will be covered for the ambulance ride, treatment and required medications.
  • Sickness: If the employee gets sick while on the job, let’s say the basement of the company is dusty and the employee is asthmatic. This has caused him an allergy because of the dust- the insurance will cover medicines till he gets better.
  • Employee disability: An electrician while fixing the AC unit has it fall on himself, in turn has a shoulder displacement and is disabled for a while, his medicines and any treatment will be covered under the insurance.
  • Missed wage replacement: Bringing forward the same example of an electrician, when he is disabled and can’t physically come to the job and work, the wages missed for weeks or even months will be covered by the insurance company. Because the work was missed due to work-related mishap, the employee will receive that certain amount of wage he would have otherwise earned.
  • Additional medical benefits in hospitals: Under the insurance, employees are also covered for additional benefits in the hospital like follow-up treatments and routine checkups. Please note that these are only liable if the illness/injury has happened at work.

Who is exempt from Workman’s Compensation?

The purpose of filing an exemption is for an officer of a corporation or member of a limited liability company to exclude themselves from the workers’ compensation laws. Upon issuance of a Certificate of Election to be Exempt, the officer or member is not an employee and may not recover workers’ compensation benefits.

These people are eligible for workmans comp exemption:

  • Businessmen
  • Business owners
  • Longshoremen
  • Volunteers
  • Independent contractors
  • Federal employees
  • Railroad employees

Workers’ Comp Exemption Sole Proprietorship

A sole proprietorship business, where there is a single owner and no employees, naturally doesn’t need to have workers comp. This means that they have workmans comp exemption.

A sole proprietor that has representatives is consequently prohibited from the business’ workers’ compensation insurance coverage. The sole owner may choose to have him/herself included in that coverage by documenting Form C-105.32 with the insurance transporter. That inclusion political race structure might be acquired from the protection transporter.

In any case, if a sole owner has no employees but obtains a workers’ compensation policy, the sole proprietor is automatically included in that policy. The sole owner may choose to have oneself prohibited from that inclusion by documenting a legitimate structure with the insurance carrier. That coverage election form may be acquired from the insurance carrier. This may happen when the sole owner is recruiting subcontractors however doesn’t wish to be included on the policy.

Workers Compensation Insurance Rates

This mathematical section of the article is actually very important for you to get an idea of what an average worker’s compensation rate looks like as per the nature and risk involved in the business.

The average cost of a worker’s compensation is around $40,000 with an average premium of $47 a month.

Here is a list of industries and the average premiums they have to pay annually.

Industry Average Premium Per Year
Administration & Facilities Support Services $327
Agriculture, Forestry & Fishing $1858
Arts, Entertainment & Recreation $1436
Construction & Trade Contractors $5331
Educational Services $1322
Finance & Insurance $1436
Healthcare & Social Services $1009
Hotels or motels $2058
Management of Companies & Enterprises $2400
Manufacturing & Food Production $2214
Underground Mining $7312
Personal Services & Miscellaneous Organizations $383
Professional & Technical Services $1833
Public Service & Public Administration $445
Real Estate $332
Restaurants and Taverns $818
Retail Trade $1013
Telecommunications & Information $1598
Transportation & Warehousing $4290
Utilities & Sanitation Services $1004
Wholesale Trade $2338

Note: Sample rates have been extracted online, courtesy of WorkCompLab.

As you can see in the table above, high risk businesses such as construction companies, warehousing, underground mining are the jobs with the highest amount of annual premiums because of the high risk of injuries or death involved.

Industries such as administration jobs and real estate have the lowest premiums because of low risk involved, as these jobs require desk work.

Do LLC Members need Workers Comp?

According to Worker’s Compensation Board, under Section 54 of the Workers’ Compensation Law, members of a Limited Liability Company (LLC) or a Limited Liability Partnership (LLP) are treated the same as partners of a business that is a partnership under the laws of New York State.

If the LLC or LLP has employees, the members of the LLC or LLP, themselves, are automatically excluded from that coverage. The members may elect to have themselves included in that overage by filing a proper form, the C-105.32 with the insurance carrier. That coverage election form may be obtained from the insurance carrier.

Workers’ compensation coverage is not required for members of a LLC or LLP that does not have employees. (Employees) However, if a LLC or LLP that has no employees obtains a workers’ compensation policy, the members of the LLC or LLP are automatically included in that policy. The members of a LLC or LLP may elect to have themselves excluded in that coverage by filing a proper form with the insurance carrier. That coverage election form may be obtained from the insurance carrier.

Florida Workers Comp Exemption Database

The reason for documenting an exception is for an official of an organization or individual from a restricted risk organization to prohibit themselves from the laborers’ pay laws. Upon issuance of a Certificate of Election to be Exempt, the official or part isn’t an employee and may not recover workers’ compensation benefits.

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To apply for or renew an exemption from workers’ compensation law, the exemption applicant should finish and present a Notice of Election to be Exempt application online to the Florida Division of Workers’ Compensation.

For more details or information on how to apply and renew documents, you can visit the official website at MyFlorida.

Workmans Comp Exemption State Laws

Although it is a known fact that certain employees are automatically exempt from workmans comp because of the nature of their job. These people in turn are not eligible to receive workers compensation benefits if they get sick or hurt while on the job.

Here are what laws certain states have regarding workmans comp exemption:

State Workmans Comp Exemption
Alabama You are not required to carry coverage for farm laborers, domestic laborers, or casual laborers (such as temporary employees or employees hired on a part-time basis for only an hour or a day at a time).
Alaska -The sole proprietor of a sole proprietorship

-Partners in a partnership

-Members of a limited liability company with a minimum 10% ownership interest

-Executive officers of municipal, religious, and legally registered nonprofit corporations. -These are not considered to be employees unless the corporation specifically elects to cover them.

-Executive officers of for-profit corporations with a minimum 10% ownership interest

Arizona -Independent contractors

-Casual laborers

-Sole proprietors having no employees

-Employees who have voluntarily rejected workers’ compensation coverage

 

Arkansas -Agricultural farm laborers

-Domestic service employees in a private home

-Gardeners, maintenance workers, remodelers, or employees who perform similar work in a private home or employer residence

-Certain government agency employees

-Employees of nonprofit, religious, charitable, or relief organizations

-Employees of newspapers, magazines, periodical vendors, sellers, and deliverers

-Real estate agents

California -Sole proprietors who opt out of coverage

-Employers who are approved to self-insure

Colorado -Certain casual maintenance or repair work performed for a business for under $2,000 per calendar year

-Licensed real estate agents and brokers working on commission

-Any person who volunteers time or services for a ski area

-Certain business owners

-Independent contractors who are generally defined below

-Certain domestic, maintenance, or repair work for a private homeowner that is not done full-time

-Drivers under a lease agreement with a common or contract carrier

-Federal employees and railroad employees (covered under federal laws)

-Certain corporate officers and members of LLCs

Connecticut -Domestic workers who work fewer than 26 hours per week

-Sole proprietors, corporate officers, partners in partnerships, and members of multi-member LLCs. They may opt out but have to provide coverage for their employees.

Delaware -Farm laborers

-Household workers employed in a private home who earn less than $750 in cash in a three-month period

Florida -Farm laborers (unless there are more than six regular employees and/or 12 seasonal employees)

-Independent contractors

Georgia Businesses with three or more employees are required to carry coverage, with the only exemptions being sole proprietors and partners in a partnership.
Hawaii -Sole proprietors, partners, and corporate officers

-Domestic workers earning less than $225 per calendar quarter

-Some 25% stockholders and all 50% stockholders

-Real estate salespeople paid by commission

Idaho -Household domestic employees

-Casual employees

-Sole proprietors, partners, and corporate officers

-Members of an employer’s family if the employer is the owner of a sole proprietorship

-Real estate agents

 Illinois -Sole proprietors, partners, and corporate officers

-Real estate agents

Indiana -Sole proprietors, partners, and corporate officers

-Independent contractors

-Real estate agents

-Casual employees

-Farm and agricultural employees

-Household employees

-Railroad employees

Iowa -Sole proprietors, partners, and corporate officers

-Independent contractors

-Some persons employed in agriculture or by a relative

-Employees who perform casual labor that is not performed for purposes of the employer’s trade or business or if the employee’s services are performed in or about the employer’s dwelling

Kansas -Some agricultural workers

-Sole proprietors, partners, and corporate officers

-Independent contractors with no employees

Kentucky -Agriculture employers/employees

-Domestic workers in private homes if fewer than two (must work less than 40 hours per week)

-Those working for sustenance if with charitable or religious organization

-Certain religious organizations

Louisiana -Certain employees of a private residence

-Certain employees of a private unincorporated farm

-Certain musicians and performers

-Employees covered by certain federal laws

-Employees of railroads or other vessels in interstate or foreign commerce

-Crews of airplanes engaged in crop dusting or spraying operations

-Uncompensated officers and members of boards of directors of certain nonprofit organizations

-Landmen

Maine -Sole proprietors, partners, and corporate officers

-Some domestic workers

-Some agricultural workers

Maryland -Sole proprietors, partners, and corporate officers

-Some agricultural workers

Massachusetts -Members of an LLC, partners of a limited liability partnership, or sole proprietors of an unincorporated business (employees must still be covered)

-Domestic service workers who work fewer than 16 hours per week

Michigan -Some agricultural employees (fewer than three employees working fewer than 35 hours per week)

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-Some domestic employees (fewer than three employees working fewer than 35 hours per week)

Minnesota -Sole proprietors, partners, and corporate officers

-Employers covered by federal liability laws

-Family farm operations, with some restrictions

Mississippi -Sole proprietors, partners, and corporate officers

-Employers with fewer than five employees

-Domestic laborers

-Farm laborers

-Independent contractors

Missouri -Railroad, postal, and maritime workers covered under federal laws

-Farm laborers

-Domestic servants in a private home

-Occasional labor performed for or related to a private household

-Qualified real estate agents

-Direct sellers

-Volunteers of a tax exempt organization

-Sports officials or contest workers for interscholastic activity programs or amateur youth programs who are not employed by the sponsor of the event

Montana -Sole proprietors, partners, and corporate officers

-Household or domestic employees whose typical duties include house cleaning and yard work

-Casual employment

-Persons working in return f or aid or sustenance only

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-Amateur athletic officials, including a timer, referee, umpire, or judge

-Real estate, securities, or insurance salespersons paid only by commission with no guarantee of minimum earnings

-Direct sellers

-Newspaper carriers who deliver singles or bundles of newspapers and have acknowledged no coverage in writing

-Freelance correspondents who submit articles or photos for publication, are paid for each item, and have acknowledged no coverage in writing

-Licensed barbers or cosmetologists who contract with cosmetology establishments

-Petroleum land professionals

-Licensed jockeys riding in a horse race, from the time the jockey reports to the scale room through the time that the jockey is weighed out after a race

-Licensed trainers, assistant trainers, exercise persons, or pony persons while on the grounds of a licensed horse race meet

-Employees who are not residents of Montana and whose primary duties are not outside Montana. The employer must comply with the coverage requirements where the employee resides or performs work.

-Officers or managers of a private, nonprofit, irrigation ditch company, or water user cooperative, corporation, association, or organization

-An ordained, commissioned, or licensed minister of a church or a member of a religious order

-Persons providing companionship services or respite care for individuals who cannot care for themselves. The person providing the services or care must be employed directly by a family member or a legal guardian.

-Volunteer workers, excluding air search and rescue volunteers, volunteer reserve auxiliary law enforcement, and volunteer firefighters

-Professional athletes on a team or club engaged in contact sports

-Employees of freight brokers or freight forwarders

-A musician performing under a written contract

-Some agricultural workers

Nebraska -Employment related to those interstate commerce entities that are not subject to the legislative power of the state of Nevada

-Employment covered by private disability and death benefit plans that comprehend compensation payments of equal or greater amounts than those provided in NRS 616 and that have been in effect for one year prior to July 1, 1947

-Employees who are brought into Nevada on a temporary basis and who are insured in another state if extraterritorial coverage provisions are in effect with the other state

-Casual employment in the construction trade (employment lasting not more than 20 days and having a total labor cost of less than $500), if employment is not in the course of trade, business, profession, or occupation of the employer

New Hampshire -Sole proprietors

-Limited liability company (LLC) that has three or fewer executive officers or LLC members and no other employees

New Jersey All employers with one or more employees must provide coverage, exempting only employees covered by federal programs.
New Mexico -Sole proprietors. However, sole proprietors are counted as employees for the purpose of determining whether a business has three or more workers.
New York -Individuals who volunteer their services for nonprofit organizations and receive no compensation

-Duly ordained, commissioned, or licensed ministers, priests, and rabbis; sextons; Christian Science readers; and members of religious orders

-Members of supervised amateur athletic activities operated on a nonprofit basis, provided that such members are not otherwise engaged or employed by any person, firm, or corporation participating in such athletic activity

-People engaged in a teaching capacity in or for a nonprofit religious, charitable, or educational institution

-People engaged in a nonmanual capacity in or for a nonprofit religious, charitable, or educational institution

-Persons receiving charitable aid from a religious or charitable institution who perform work in return for such aid and who are not under any express contract of hire

-People who are covered for specific types of employment under another workers’ compensation system such as those employed in certain maritime trades, interstate railroad employees, federal government employees, and others covered under federal workers’ compensation laws

-The spouse and minor children of an employer who is a farmer, as long as they are not under an express contract of hire

-Certain employees of foreign governments and Native American Nations

-New York City police officers, firefighters, and sanitation workers who are covered under provisions of the New York State General Municipal Law

-People, including minors, doing yard work or casual chores in and about a one-family, owner-occupied residence or the premises of a nonprofit, noncommercial organization

-Certain real estate salespersons who sign a contract with a broker stating that they are independent contractors

-Certain media sales representatives who sign a contract stating that they are independent contractors

-Certain insurance agents or brokers who sign a contract stating that they are independent contractors

-Sole proprietors, partners, and certain one/two person corporate officers with no other individuals providing services integral to the business

North Carolina -Sole proprietors, partners, and corporate officers

-Some railroad employees

-Casual employees

-Domestic servants directly employed by the household

-Farm laborers when fewer than 10 full-time, non-seasonal farm laborers who are regularly employed by the same employer

-Federal government employees in North Carolina

-Sellers of agricultural products for the producers thereof on commission or for other compensation, paid by the producers, provided the product is prepared for sale by the producer

North Dakota

 

 

All employers must provide coverage. Insurance is provided by North Dakota Workforce Safety and Insurance.
Ohio -Sole proprietor

-Partnership

-Limited liability company acting as a sole proprietor

-Limited liability company acting as a partnership

-Family farm corporate officers

-Individual incorporated as a corporation with no employees

-Ordained or associate ministers of a religious organization

Oklahoma -Independent contractors

-Certain agricultural workers

-Licensed real estate brokers paid on a commission basis

-Certain persons providing services administered by the Oklahoma Department of Human Services

-Any person employed by an employer with five or fewer employees, all of whom are related by blood or marriage to the employer

-Any person employed by a tax-exempt youth sports league

-Sole proprietors, partners, and corporate officers

-Any person who provides voluntary service and who receives no wages for the services other than meals, drug or alcohol rehabilitation therapy, transportation, lodging, or reimbursement for incidental expenses

-Owner-operators of a truck-tractor

-Drive-away owner-operators

Oregon -Sole proprietors, partners, and corporate officers

-Family-owned companies with no employees that have multiple family members working in the same company

-Leased workers

-Temporary workers

Pennsylvania -Federal workers

-Longshoremen

-Railroad workers

-Casual workers

-Some agricultural laborers

-Domestic workers who do not come under the Workers’ Compensation Act

-Sole proprietors, partners, and corporate officers

-Those who have been granted exemption due to religious beliefs by the Department of Labor and Industry

-Executive officers who have been granted exemption by the Department of Labor and Industry

-Licensed real estate salespersons or associate real estate brokers

Rhode Island -Sole proprietors, partners, and corporate officers

-Independent contractors

South Carolina All employers with four or more employees must provide coverage.
South Dakota Employers are not required to carry workers’ compensation coverage.
Tennessee -Farm laborers

-Domestic laborers

-Sole proprietors, partners, and corporate officers

Texas Employers are not required to carry workers’ compensation coverage, except for private employers who are contracted with the government.
Utah -Sole proprietors, partners, and corporate officers

-Independent contractors

Vermont -Casual employees

-Persons engaged in amateur sports

-Some agriculture employees

-Volunteers

Virginia -Sole proprietors. However, sole proprietors are counted as employees for the purpose of determining whether a business has three or more workers.
Washington D.C. Workers’ compensation insurance is required in Washington, D.C. if an employer has one or more employees. An employer is also entitled to apply for self-insurance, but must be approved by the Department of Employment Services (DOES) office.

Sole proprietors in Washington, D.C., can purchase workers’ compensation insurance for themselves, but they are not required to unless they have employees. Homeowners are required to have workers’ comp insurance for domestic workers if they work at least 240 hours during any calendar quarter in the same or previous year.

Washington -Some officers of public corporations

-Some independent contractors

-Volunteers

West Virginia -Domestic workers

-Casual laborers

-Employees of a church

-Those engaged in professional sports activities

-Employers covered by federal programs

Wisconsin All employers with three or more employees must provide coverage. Employers with fewer than three employees but who pay wages of $500 or more in any calendar quarter are also required to carry workers’ compensation coverage. Exemptions include some farm laborers.
Wyoming All employers must provide coverage, with exemptions for sole proprietors, partners, and corporate officers, and their spouses and dependents.

Note: Sample data has been extracted online, courtesy of Cerity.

Conclusion

Workmans comp insurance is given to employees which provides protection to them if they were to get hurt or sick on their job. This is part of the employer’s insurance program, who makes it mandatory for his employees to get enrolled in the policy.

It is the employer’s responsibility to pay all insurance premiums on time to keep the policy in force, and employees are not required to contribute to the payment in any way; they are only there to receive coverage benefits.

However, this isn’t for all employees: there is workmans comp exemption too for certain types of workers like independent contractors, farm workers, domestic servants in a home with fewer than two full-time employees, and employees protected by federal laws (railroad and maritime workers). There are several state laws for workmans comp exemption for employees who are exempt from receiving workers compensation benefits.

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John Otero

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.

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