A Guide To Workers Comp Exemption

A Guide To Workers Comp Exemption

by Evelyn Addison — 5 months ago in Review 2 min. read

Many states require businesses and employers to have workers’ compensation in case any of their employees suffer a work-related illness or injury. But, in some cases, employers may apply for workers comp exemption insurance exemption.

While doing so might minimize the overall business insurance cost, it poses some risks. Let’s go through the following sections of this detailed guide to workers comp exemption to discover more.

What is Workers Comp Exemption?

It’s possible to apply for workers comp exemption for specific types of employees, such as independent contractors. That means you do not have to offer workers compensation to cover those staff in case they get sick or hurt from their jobs. Before you can consider whether an exemption is suitable or possible for your workers, you need to weigh risk factors related to your company.

Also read: 10 Best Android Development Tools that Every Developer should know

Who Qualifies for Workers Comp Exemption?

In most cases, your workers can get insurance benefits if they get sick or hurt from their job. However, some states exempt certain types of workers or jobs from coverage. For instance, not all states require workers comp for independent and self-employed contractors. Also, an exemption from workers compensation may apply to:

  • Maritime workers
  • Railroad employees
  • Farm or agricultural workers
  • Volunteers
  • Shop owners
  • Government workers
  • Household and domestic workers

Some states may also exclude workers from getting compensation benefits if they:

  • Have mental health problems not caused by their job
  • Got hurt while away from their job
  • Are hurt due to policy violation, self-inflicted, or their injuries are from a fight

How Do Businesses Apply for Workers Comp Exemption?

Application for workers comp exemption depends on various factors, including business location. Let’s look at an example; some states categorize non-workers as exempt; however, this isn’t always the case.

Businesses need to file a formal waiver for workers comp exemption with their respective regulatory agencies. During the application process, businesses may be required to provide these details:

  • Application fee
  • Current workers comp insurance carrier
  • Valid and up-to-date business licenses
  • Contact information
  • Employee information
  • Business structure and type
  • Proof of business ownership
  • A business description

If the application process is approved, the business or employer will get a workers comp exemption certificate. Depending on your state, the exemption certificate may be only valid for between one and two years. That means your business must file workers comp exemption renewal as required by the state.

Should Businesses File for Worker’s Compensation Exemption?

The debate of whether workers comp is right for your business requires careful consideration of cons and pros. Not paying for workers’ compensation reduces the overall business insurance coverage costs.

However, workers may file lawsuits, especially when they feel their employer is responsible for their injuries or sicknesses, even if they have an exemption certificate. Also, it’s important to keep in mind that sole proprietors are not always covered by health insurance for job-related injuries. That means they may pay for medical care out of pocket.

Evelyn Addison

Evelyn is an assistant editor for The Next Tech and Just finished her master’s in modern East Asian Studies and plans to continue with her old hobby that is computer science.

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