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When it’s time for a business owner to get insured, the questions we get most frequently are related to workers compensation. Here are a few of the most common: “Can I exclude myself from my own work comp?” “Can family members be excluded?” “What’s an experience modifier?” “What happens if an employee is injured?” “Should my subcontractors carry their own work comp?” All of these are valid questions and will be covered in future blog posts, but in order to answer these questions we need to first start with the basics.

The question we receive most often is this: “Am I required to carry workers compensation?” The answer, in a broad sense, is “yes.” If a business has five or more employees, the state of Missouri requires that business to carry workers compensation. The exception to that rule is any business in a construction industry: the state requires those businesses to carry workers compensation if they have one or more employees.

However, there are exemptions and exceptions based on the type of industry, type of business entity (sole proprietor, limited liability company (LLC), partnership, etc.), and the total number of employees an employer has.

Here are five questions you need to answer in order to determine if you are required to carry workers compensation in the state of Missouri.

While answering the questions below, it’s necessary to note that an individual in Missouri is an employee regardless of employment status. Whether they’re full/part time, seasonal, temporary, a family member, an LLC member or a corporate officer they are counted as an employee. Sole proprietors and partnerships are considered employers, not employees, so they don’t count towards the total.

1. Are you a sole proprietor, or partnership?

  • Yes – If you’re a sole proprietor or partnership with no employees, you’re not required to carry workers compensation on yourself, although you still have the option to purchase workers compensation coverage.
    • If you do have employees, move to question number 2.
  • No – move to question number 2 

2. Are you in a construction industry? (see definition of construction below)

  • Yes – move to question number 3
    • The Missouri Department of Labor states that you’re in a construction industry if you erect, alter, demolish or repair improvements. In a nutshell, if you’re a carpenter, electrician, roofer, concrete worker, landscaper, painter, etc., you’re in a construction industry.
  • No – move to question number 4

3. Do you have one or more employees?
*Corporate officers & members of an LLC do count towards employee total

  • Yes – Call us to go over your options, this scenario can be tricky and it’s best to go with a solution tailored to your specific situation. Employers with one or more employees in the construction industry are required to carry workers compensation coverage, but there are a few things to consider:
    • Though the state of Missouri does allow an LLC member to reject or exclude themselves from workers compensation, it is technically still required because the LLC is considered the employer, and a member is counted as an employee.
    • In a scenario where an LLC member is the only employee, there are two options:
      1. Purchase a standard workers compensation policy to cover yourself if you’re injured on the job. Or,
      2. Purchase a policy that is described as a “ghost policy” and reject workers compensation. There are very few companies that will write this type of policy. Again, contact us and we’ll help you figure out the best solution for you.
  • No – Workers compensation isn’t required*
    • Let’s refer back to question number 1. If you are a sole proprietor or a partnership with no employees, you’re not required to carry workers .
    • *There are still some situations where you might be required to carry workers compensation, even with no employees. Call us for more details to make sure you are covered.

4. Do you have five or more employees?

*Corporate officers and members of an LLC do count towards employee total

  • Yes – workers compensation is required.
  • No – workers compensation isn’t required
    • However, if you choose not to purchase workers compensation or to self-insure, you still have exposure to potential lawsuits from an employee if they’re injured on the job.

5. Do you employ anyone from the following groups?

Farm laborers, domestic servants in a private home, qualified real estate agents and direct sellers, commercial motor-carrier owner-operators, or volunteers of a tax-exempt organization.

  • Yes – Per the state of Missouri, these specific groups of employees are exempt from carrying workers compensation, but you can voluntarily provide coverage.
  • However, if you have employees in an exempt industry and you don’t purchase workers compensation, you may still be exposed to civil lawsuits brought by employees injured on the job.

These five questions are just a starting point to guide you in the right direction and assist you in determining whether you’re required to carry workers compensation. Watch for our future posts, as we continue to dive deeper into workers compensation and more.

If you have questions, need to start a workers comp policy, or need a review of your current policy, call us today or fill out the form below – we’ll make sure you have the coverage you need.

Author Creig Scott

Creig joined the SBI team in May, 2015. Creig is presently licensed in property, casualty and life insurance. Read More About Creig

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