Businesses That Do Not Have to Carry Workers Compensation Insurance

All fifty states mandate that nearly all businesses within their borders need to carry workers compensation insurance in order to cover the cost of a work-related illness or injury suffered by one of their employees. Very few businesses are exempt from providing workers compensation insurance. However, there are a few exceptions.

A small business that is employee owned and operated may not be required to carry workers compensation insurance in all fifty states. As long as everyone working at the business is an owner, workers compensation insurance coverage can become optional. That does not mean that small, employee-owned businesses are all without workers compensation insurance policies. Many businesses that fall into this category still have the option to purchase workers compensation insurance to cover the owners if they so choose. That way, if the owners are concerned that they might suffer an injury or illness on the job, they will have coverage to pay their medical expenses and even make up for a percentage of lost wages.

In some other cases, employees who do not receive a base salary may not need to be covered by workers compensation insurance. For example, if your business employs sales agents whose sole wages are commission based, they may not have to be covered by a workers compensation insurance policy. These regulations vary from state to state, so be sure you have a full understanding of the laws in your location.Even if you are not obligated to cover commission-based employees with workers compensation insurance, you can still purchase a policy to cover them if you so choose. While this is an added cost of doing business, it may make employment at your business more appealing than elsewhere if employees are concerned about the level of risk associated with their jobs.

Unlike with commission-based employees, in most cases you will need to provide workers compensation insurance to cover any contractors working for your business. Even though these contractors are not technically your employees, many states mandate that you provide coverage for them. Likewise, subcontractors usually also need to be covered by workers compensation insurance in order to perform work for your business. If you have any doubts about the level of workers compensation insurance coverage you are required to provide, check with your state government or a local insurance provider.



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