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Who is Exempt From Workers' Compensation?

by James M. Hoffmann on Jan. 15, 2015

Employment Workers' Compensation Accident & Injury Employment 

Summary: Every state requires employers to have workers' compensation insurance in place to protect the rights of injured workers. However, exemptions are allowed for smaller-sized businesses, certain job categories, and top-level employees.

Workers' Compensation Exemption for Small Businesses

Although every state requires employers to offer workers' compensation insurance, there are some exemptions offered for smaller-sized businesses. While the maximum number of employees required for an exemption is determined by the state, it normally ranges from one to five employees. The type of work employees perform also determines whether or not the employer qualifies for exemption. Employers should verify with the Labor and Employment Department of their state to check whether they are qualified for the exemption.

Workers' Compensation Exemption Based on Job Category

Since workers' compensation laws vary from one state to another, there are also some variations on job category exemptions. There are, however, some general rules that all states follow. These rules include the following:

  • Casual employees that follow an irregular schedule. A number of states also have specific wage limits for the annual wage of employees.
  • Household domestic service workers.
  • Members of the family living with the owner of the business.
  • Real estate agents and other sales employees whose compensation is based solely on the commission they receive.

Businesses may not offer workers' compensation insurance to independent contractors. These contractors are not compelled to get their own insurance. Missouri workers' compensation attorneys believe that since workers' compensation exemptions reduces the insurance premiums that employers have to pay, a number of employers try to benefit from the exemption. However, considerable penalties are imposed on employers who do not provide insurance for their employees. Penalties are also imposed on employers who intentionally categorize employees as independent contractors.

Workers' Compensation Exemption for Certain Top-Level Employees

The owner of a business and certain top-level employees may choose to participate or opt out of workers' compensation coverage. However, this is determined by state law. Some employees who can opt out of workers' compensation insurance include:

  • Corporate directors or officers: Top-level managers, such as the treasurer or president, who receive a particular percentage of the stocks of the company may be exempt. The percentage is normally around 10 percent.
  • Limited liability company members: A minimum ownership percentage is often required as well as a supervisory role within the company.
  • Officers in the construction industry: A number of states consider the construction industry dangerous for workers and do not offer this exemption.
  • Members of the family: Members of the family who live in the house of the business owner may be exempt.

If you are uncertain of whether or not your business may qualify for any exemptions, contact a Missouri workers' compensation attorney to seek clarifications.

The Law Office of James M. Hoffmann

(314) 361-4300

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