Workers Compensation mandatory for ALL LLC's and Corporations

[AZDave]

For AZ anyway. Even if you have no payroll, each and every LLC and Corporation must now show proof of work comp to the State Industrial Commission, or subject to hefty fines.

Is this also the case in other states?

Evidently its always been the law, but now AZ is enforcing it. Can't blame them, the State is tired of paying for uninsured job site injuries. But cmon, the simple LLC's and Corporations with clearly no payroll being mandated to show proof or else is a bit extreme.

If your an AZ agent, get ready to sell a ton of ghost policies thru NCCI. What a pain.

Dave

 

[adjusterjack]

It's been a long time but I seem to remember that sole proprietors were excluded but could opt in and partners were included but could opt out.

I didn't find anything on the ICA website about enforcement.

 

[AZDave]

One of my insureds was randomly chosen. He has a corporation with no payroll and never has had payroll. My understanding in the past was if no payroll, no work comp is required. Not the case. Just so happens this insured is a general contractor. If the ICA is going to enforce this law, general contractors would be the good place to start checking.

I spoke with the folks at the BigI and this is getting a lot of discussion with this new enforcement. The Big I representative told me about a legislative hearing recently and a lawmaker asked the ICA a question: she owns a rental home and has the rental home titled in the name of an LLC - is she going to be required to carry work comp? Answer: Yes.

Not sure how many investigators they have down there but its easy to say if there now checking, they are quite busy with the compliance.

Is this the same in other states?

 

[adjusterjack]

Here's what I found on the ICA website:

AM I REQUIRED TO HAVE WORKERS' COMPENSATION INSURANCE IF MY BUSINESS IS A CORPORATION?

A corporation is an employer under the Act and, therefore, must obtain workers' compensation insurance for its employees which may include officers, directors or shareholders.

AM I REQUIRED TO HAVE WORKERS' COMPENSATION INSURANCE IF MY BUSINESS IS A LIMITED LIABILITY COMPANY (L.L.C.)?

If an L.L.C. employs one or more employees, an L.L.C. is required to obtain workers' compensation insurance for its employees. Employees may include members and managing members.

CAN AN EMPLOYEE ELECT NOT TO BE COVERED UNDER MY WORKERS' COMPENSATION INSURANCE?

An employer may not require the employee to waive rights to workers' compensation as a condition of employment, nor require an employee pay any portion of the employer's workers' compensation insurance premium. An employee may, however, voluntarily reject workers' compensation insurance by providing a written notice to the employer which the employer files with his workers' compensation insurance carrier. In most instances, this rejection must be filed before the employee suffers an industrial injury. An employee may also later rescind that rejection in writing but must do so before the occurrence of an industrial injury.

https://www.azica.gov/sites/default/files/migrated_pdf/Claims_FAQs_WorkersCompensation.pdf

Stands to reason that corporate officers, directors, shareholders and LLC members who work in the daily operations of the business are exposed to injury or occupational disease and are required to be covered.

But if their respective companies don't have any other employees and don't want to pay for coverage on themselves, the WC law allows them to reject WC coverage in writing on a form provided by the ICA:

Employee Rejection of Terms Form | Industrial Commission of Arizona

With regard to your contractor, it's not so much that he is a contractor with no employees as it is that he is a corporate officer who is required to be covered as an employee unless he expressly rejects the coverage though he may still have to buy WC insurance on his subcontractors unless his subcontractors provide evidence of their own WC coverage.

And, yes, it's probably the same or similar in other states. Here's a website that has state by state comparisons:

Workers' Compensation Law – State by State Comparison







.

 

[jaygreen002]

It is required in most of the states, in my case NYS.

 

[EugeneM]

They are getting creative thats for sure. reminds me of whats going on here in ca regarding exclusion waivers and workers comp in July. for some entity types CA is broadening who can be excluded from a comp policy but you have to provide proof of health insurance.

Link