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Workers’ Compensation Exemption: All You Need to Know

The workers’ compensation insurance varies from one state to another. Same way, state-by-state works comp exemptions are unique. So it is imperative to know the exemption laws as per your state. Certain types of businesses can apply for workers’ comp exemption. 

What Is A Workers’ Compensation Exemption?

State by state, workers’ compensation exemption means when the employee has not been covered for compensation insurance benefits for work-related injuries. 

If the employee is not covered, they must bear all medical expenses, treatment expenses, and ongoing care costs. 

Workers’ compensation is a method in the United States and many countries that provide benefits to employees who are ill or contract an injury at work. State governments usually administer the program as part of social welfare programs.

Who Is Exempt From Workers’ Compensation Coverage? 

As every state has its compensation insurance laws as well as have their own exemption rules and policies. 

A few examples of some state’s exemption rules are listed below:

  • Workers’ compensation exemption applies to companies with five or lesser employees. 
  • As in Florida, you don’t need to cover such insurance if you don’t run a construction business or have less than five employees. 
  • Independent contractors are exempt from insurance coverage like in States Rhode Island.
  • Corporate officers, sole proprietors, or volunteers don’t need this insurance coverage in many states like Colorado. 
  • Businesses that come in categories like agricultural, private household, real estate, or religious organizations don’t require to cover workers comp insurance. 
  • Personal chefs, maids, seasonal workers, and freelancers are exempt from insurance coverage. 

Difference Between Independent Contractors And Volunteers 

Workers’ compensation insurance does not cover volunteers and independent contractors. 

Still, there are some exceptions, as in some states, volunteers are covered through comp insurance like firefighters. 

Regarding independent contractors, employers are not liable to pay for workers’ compensation insurance. However, state-by-state works comp exemptions treat them as a worker. In such cases, they are eligible for compensation insurance security. 

Sometimes, they wrongly classify their workers as independent contractors to save money on workers’ compensation insurance

Not only are the specific types of exempted employees, but some types of claims are exempted. 

Workers’ compensation insurance doesn’t include the following:

  • Injuries caused as you violated the safety rules of the company
  • Self-inflicted injuries
  • Any kind of stress or mental trauma is not work-related
  • Injuries caused during an office fight
  • Injuries under the influence of alcohol or drug 

These claim exemptions also vary from state to state. You must be aware of your state policies and regulations as per law. 

Notice of Election To Be Exempt From Workers’ Compensation

It is a form that must be filled out duly if you file an exemption. 

Some general information that is required to file the exemption is as follows:

  • Your proof of ownership
  • Business or industry type
  • All up-to-date licenses
  • Employee job details 

Make sure you fill out the form and file it with the Workers’ Compensation Insurance Board.

Once you receive a certificate of exemption, keep it securely with other essential documents. 

Employees and employers must be clear with these compensation exemption policies.

Final Conclusion

Workers’ comp insurance laws are present in every state. However, some states provide workers exemptions too. As the law changes from one state to another, exclusion can be for an employee, a group of employees, or a company. 

When one hires the staff temporarily, that too is exempt from workers’ compensation insurance benefits. These exemptions save money for employers on their insurance value. Contact a facility that offers professional assistance and get further details.

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