I am a Sole Proprietor, Partner or Stockholder. Am I required to have workers’ compensation coverage on myself?

No.  Sole proprietors, members of a partnership, members of a limited liability company who own at least 10% of the capital of the limited liability company and certain stockholder employees who own at least ten percent (10%) stock in the corporation are specifically exempted from the workers’ compensation laws of the state by law.  However, such persons may elect to be covered by a workers’ compensation insurance policy.  

We own a business that only employs immediate family members. Do we have to purchase workers’ compensation insurance?

An employer with 5 or fewer total employees, all of whom are related by blood or marriage to the employer, are exempt from the Workers’ Compensation Code by law. 

Are there penalties for not obtaining workers' compensation coverage?

Yes.  An employer required by law to secure workers’ compensation coverage that fails to obtain such coverage, may be charged with a misdemeanor and subjected to a fine.  In addition, after an employer is cited for 2 offenses of failing to obtain workers’ compensation coverage, the Commissioner of Labor has the authority to order cessation of business activities until insurance is procured.