In Florida, according to the state’s Division of Workers’ Compensation, a corporate officer or LLC member who wants off workers’ comp files a Notice of Election to be Exempt, signs it personally and, once it’s issued, can’t collect workers’ comp benefits for their own injuries. Florida’s process is one version of a rule most states have in some form: owners, partners, LLC members and officers are often allowed to leave themselves off workers’ compensation, either automatically or by filing something, and leaving yourself off usually means you’re on your own if you’re hurt on the job.
So the law often doesn’t make you cover yourself. Whether you should is a different question, and a roofer who owns a one-truck business and a consultant who owns a two-person agency will land in different places. That second question is where most of this guide goes.
Key takeaways
- Whether owners are covered by workers’ comp, and whether they can opt out, depends on your state and how your business is set up.
- Excluding yourself typically means you can’t collect workers’ comp benefits for your own work injury.
- In some states, an excluded owner still counts toward the employee threshold, so opting out may not remove the need for a policy.
- General contractors and clients sometimes require owner coverage, or proof of an exemption, before work starts.
- If your work is physical and an injury would stop your income, cover yourself.
How owner rules generally work
Workers’ compensation is built to cover employees, and owners sit at the edge of that definition, so each state draws its own lines, though the patterns look roughly like this, depending on the state and your structure:
- Sole proprietors are often not covered automatically but may be able to choose coverage for themselves.
- Partners and LLC members are often treated like sole proprietors, with the option to elect coverage or exclude themselves.
- Corporate officers may be treated as employees by default, with the option to exclude themselves if they meet the state’s conditions, which can depend on how many officers or stockholders the company has.
- Construction businesses are sometimes handled differently from every other industry.
These patterns help, but don’t rely on them. Find your state’s agency on the federal Department of Labor’s list of state workers’ compensation officials and read its page on owners, officers or exemptions.
Two states, two different machines
The mechanism differs from state to state too, and it decides what paperwork you need and who holds it.
Florida ties the exemption to the person. According to the Florida Division of Workers’ Compensation, corporate officers and LLC members apply by submitting a Notice of Election to be Exempt online, choosing a construction or non-construction path, and the applicant has to sign it personally; the division warns that anyone else signing it can face a third-degree felony charge. Once the exemption is issued, the officer or member isn’t considered an employee of the business and can’t recover workers’ comp benefits. Notice what that means in practice: the exemption follows the person, and it’s the state’s record, so a general contractor checking whether you’re covered is really checking whether you hold a valid exemption.
Wisconsin works mostly through the insurance policy itself. According to the Wisconsin Department of Workforce Development, a closely held corporation with no more than 10 stockholders can let one or two officers exclude themselves by an endorsement on the corporation’s workers’ comp policy, naming each excluded officer, and the exclusion lasts for the policy period. In other words, in Wisconsin the officer usually still needs a policy for the exclusion to sit on. The exception is narrow: a corporation with one or two officers and no other employees can skip a policy if each officer files a Notice of Corporate Officer Option with the state, and a corporation with more than two officers or any other employee has to carry one.
And here’s the detail that surprises owners most. Wisconsin’s guidance says an officer who opts out is still an employee of the corporation, and that officer’s wages still count toward the state’s thresholds for needing coverage at all. So excluding yourself takes you off the coverage without necessarily taking your business out of the requirement.
That’s two states and two systems, but yours may look like neither. The useful habit is to ask three questions of your own state’s agency: who can opt out, how (a state filing or a policy endorsement) and whether an excluded owner still counts toward the employee threshold.
If your work is physical, cover yourself
Our view: an owner who works on ladders, under lifts, at a fryer or on their feet with clients all day should usually stay on the policy. The reasons stack up.
- The injury risk is real. A contractor, a mechanic, a chef or a stylist does the same work as the employees the policy is built for.
- Your income depends on you working. Workers’ comp typically pays part of your lost wages while you recover, at the levels your state sets, along with medical care for the injury.
- Your other coverage may not fill the gap. Some health plans may exclude injuries that happen at work, on the assumption that workers’ comp will pay, and disability policies often make you wait weeks or months before benefits start. Read both before you count on them.
- A client or general contractor may require it. Some contracts expect everyone on the job to be covered, owners included.
- It’s simpler at audit. Some general contractors’ insurers charge for subs who can’t show coverage, and an owner-only business with no policy can raise questions. See do independent contractors need workers’ comp.
Is opting out ever the smart move?
Yes, for some owners. It’s most often the right call for an owner who works at a desk, like an accountant or a two-person design agency, where the realistic injuries are few and the cost of covering the owner’s pay is easy to see on the quote.
Cost is the honest reason to opt out, and it’s a fair one. An included owner’s pay is generally part of the payroll the premium is based on, though how an owner’s pay is counted follows rating rules that vary by state, and the figure used may not be what you actually take home, so ask your insurer which number it would use for you before you compare. Some owners rely on their own health and disability insurance instead, but only after reading what it actually covers. Just make the decision with both quotes in front of you.
Read your contracts before you opt out
Contractors, especially, can lose this decision to a client. A general contractor’s subcontract may require workers’ comp for everyone on site, or may accept an exemption only with the right paperwork, and losing a job over it costs more than the premium would have. Before you exclude yourself, check your current contracts and the ones you’re bidding on, look at what your biggest clients have asked for before, and ask whether they’ll accept a state exemption, a certificate showing an owner exclusion or neither. How to read insurance requirements in a client contract walks through what to look for.
How to decide
- Check your state’s rules for your business structure through the DOL’s list of state agencies.
- Be honest about the risk. How physical is your work, and how long could you go without income?
- Read your other coverage. See how your health and disability insurance treats work injuries.
- Read your contracts. Note any that require owner coverage.
- Get a quote both ways. Compare the premium with and without yourself, then decide. How workers’ comp premiums are calculated explains what drives the number.
- Review it every year, and again when your work, structure or contracts change.
If you already have a Corgi policy, workers’ comp can be added to it without a new application. One more point for one-person businesses: if you have no employees and you exclude yourself, you may have no workers’ comp policy at all, which is fine where your state allows it but leaves nothing to show a general contractor who asks, so business insurance for sole proprietors is worth reading alongside this.
See what workers’ comp costs for your business
About five minutes, all online. Your certificate is ready the day you buy.
Frequently asked questions
Does workers’ comp cover the business owner?
It depends on your state and how your business is set up. In many states, sole proprietors, partners and LLC members aren’t covered automatically but can choose to be, and corporate officers can often exclude themselves, so check your state’s workers’ comp agency.
If I have no employees, do I need workers’ comp?
The law often doesn’t require it, though it depends on your state, your structure and your industry, and some states have specific rules for small corporations or construction businesses; clients and general contractors may also require coverage before you start work, even where the law doesn’t.
Can I collect workers’ comp if I excluded myself?
Typically not. Excluding yourself, or holding a state exemption, generally means you aren’t covered for your own work injuries, and Florida’s workers’ comp division, for example, says an exempt officer or member can’t recover benefits.
Does excluding myself lower my premium?
Usually, because an included owner’s pay is generally part of the payroll the premium is based on. How much depends on your state’s rating rules, your class code and your pay, and a quote with and without your own coverage shows the difference.
Do I still need workers’ comp for my employees if I exclude myself?
Usually, yes. Excluding yourself takes you off the coverage but leaves your employees on it, and in some states an excluded owner still counts toward the number of employees that triggers the requirement.
