Nowadays, almost every company provides medical benefits to its employees in the form of medical insurance. Health insurance is one of the important factors that employees consider before joining any company.
Taking this into consideration, the government has announced a worker’s compensation scheme, which acts as a protective shield for workers.
It covers medical care and wage replacement for workers who suffer job-related injuries.
However, this wonderful scheme was exploited, as some fraudsters tried to take the benefits by presenting false medical reports. The government has created a Worker’s Compensation Exemption, under which employees won’t get benefits from medical injuries that they get during work.
Before claiming compensation, it is mandatory for an employee to show all the reports and risk factors to the company.
Every year, the government releases workers’ compensation reports and statistics under the Department of Labor.
Workers Compensation Exemption
It refers to both people and businesses that don’t have to provide any medical compensation to their employees. Generally, workers’ compensation protects the employee’s unwanted medical expenses and the business from getting sued.
It is always a good idea to double-check our state’s criteria for workers’ compensation. In fact, you can consult the state workers’ compensation division or even an insurance agent.
Who Qualifies for Compensation?
Being an independent contractor, a solo entrepreneur, or a business partner are all popular reasons for being free from workers’ compensation insurance.
However, some other groups may qualify for the scheme, too, making it essential for you to determine whether you are qualified for the compensation or not.
Here is a list of possible contenders who may qualify:
Business Owners
- Self-employed
- Businesses with a smaller payroll size
- Independent Contractors
- LLC Members
- Sole Proprietor
- Executive Officers
- Business Partners
- Cooperative Officers
- Board Directors
- CEO, CFO, and COO
Industries
- Railroad Workers
- Agricultural Workers
- Federal Employees
- Real Estate Agents
- Brokers
- Farm Workers
- Religious Workers
- Taxi drivers
- Truck drivers
- Athletes
- Truck drivers
- Domestic workers
- Maritime workers
Special Acts:
- Federal Employers’ Liability Act for railroad workers
- Longshore and Harbor Workers’ Compensation Act for maritime workers
Employee
- Part-time employees
- Volunteers
- Interns
- Seasonal workers
- Salesman
- Casual workers
- Family members (if they work for you)
That’s the end of a long list of profiles that may come under the exemption. We hope that you understand that each job profile and profession is unique, and as a result, they might have a different policy on the same medical claim.
Workers Compensation Exemption Laws by States
Despite the list, each state has its own laws for workers’ compensation exemptions. It is imperative to know your state’s unique laws about the policy for a better understanding.
Some states where you need a government contract: Texas and South Dakota
Other states by the minimum number of employees:
Employee(3+): North Carolina, Georgia, New Mexico, Arkansas, Wisconsin, Virginia
Employees(4+): South Carolina, Florida
Employees(5+): Mississippi, Alabama, Missouri, Tennessee
- Florida and Tennessee are at the same employee threshold
Some Exceptional States
- Licensed contractors in California must all have workers’ compensation insurance, even if they do not employ anyone.
Here’s a quick list:
Ventilation, Concrete, Heating, Air-conditioning, and Tree trimming
- New York: LLC members are recognized as employees and are entitled to compensation insurance unless they expressly decline coverage.
- Compensation insurance is required in New Jersey for seasonal workers who are paid wages or salaries with tax deductions.
How to Get a Workers Compensation Exemption?
Here are some quick step guides by which you can get a worker’s comp exemption. Note that there are dozens of online platforms that provide an insurance agent, but their extra fees can be avoided by doing some self-research. Just follow the steps and get a compensation exemption:
Your broker can give important guidance on the processes required to get a workers’ compensation exemption. He will advise you if you need to fill out a notice of election form and notify you of any extra information.
After filling out the exemption form, you have to hand it to the relevant body, which is usually your state’s division of workers’ compensation.
Some insurance companies are involved in the procedure and may charge a modest fee to handle the paperwork.
When your state’s division of workers’ compensation authorizes your exemption, they will offer you a certificate of election.
This certificate is crucial; therefore, keep it secure with your other critical business paperwork.
Conclusion
It’s up to you whether you want to take the worker’s compensation exemption or not. It is a personal decision that is influenced by considerations such as injury risks in your business.
The construction business is one of the most dangerous in terms of fatalities. Transportation and warehousing are second, while government contractors are third. Some workers even lost their lives during work, which makes it essential to implement.
Exemption from workers’ compensation insurance might save your company money in the long run. However, it is not business-friendly in the long run.
