Worker's Compensation Insurance Information

Which employers must carry workers' compensation coverage?

a) All private employers regularly employing 1 or more employees 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks.

b) All private employers regularly employing 3 or more employees at one time. (This includes part-time employees).

c) Agricultural employers if they employ 3 or more employees 35 hours or more per week for 13 or more consecutive weeks.

d) Households employing domestic servants if they employ anyone 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks.

e) All public employers

Who is an employee?

An employee is any person in the service of another, under any contract of hire, express or implied. A partner is considered an employee of the partnership, a corporate officer is considered an employee of the corporation, and a member who is a manager is considered an employee of a limited liability company

A sole proprietor (self-employed individual) working in his or her sole proprietorship is never an employee of that business. Domestic servants or agricultural employees who are relatives living on the premises of the employer are not considered employees.

Exclusion Form An employer may use an exclusion form only if all its employees can be excluded according to the Workers' Disability Compensation Act. The following employers may exclude employees:

a) Sole Proprietorship - If it has one or more employees and all employees are the spouse, child, or parent of the sole proprietor.

b) Partnership - If all employees are partners.

c) Stock Corporation - If all employees are corporate officers and own 10% or more stock in the corporation.

d) Limited Liability Corporation - If all the employees are members and are also managers and own 10 percent or more interest in the business.

You may find out more information about insurance requirements for subcontractors, general contractors and independent contractors in this brochure (WC-PUB-002). You may obtain a copy of the Notice of Exclusion form (WC-337) by contacting our agency at (517) 322-1195.

Purchasing Workers' Compensation Insurance The three types of workers' compensation insurance are:

1) Private. The majority of employers in Michigan obtain workers' compensation coverage through private insurance companies. A listing of approved workers' compensation insurance companies can be viewed at http://www.michigan.gov/documents/wca_ins_co_list_79584_7.pdf.

2) Individual self-insurance. This is an alternative for large companies. These companies are granted the authority to pay workers' compensation benefits from the general company operating funds. Companies with $200,000 or more in annual workers' compensation premiums frequently investigate the individual self-insurance approach as a possible coverage alternative.

3) Group self-insurance. This provides an alternative to commercial insurance for those employers unable to qualify for individual self-insured status. Group self-insured programs are groups of employers in the same industry that pool their workers' compensation premiums for purposes of meeting their obligations under the Workers' Compensation Act. These programs are reviewed and approved by the Workers' Compensation Agency annually. A current listing of group self-insurers can be viewed at http://www.michigan.gov/wca/0,1607,7-191-26927-41220--,00.html.

The premium rates for Workers' Compensation insurance are competitively determined. Insurers use about 500 different rating classifications based on the type of business an employer operates. Since premium rates for a given classification vary widely among insurers, it pays to shop carefully. Insurers also have different merit and experience rating plans, schedule-rating plans, and premium discount tables, which can affect an employer's final premium cost. You may obtain more information about shopping for workers' compensation insurance by visiting the Michigan Economic Development Corporation's website at: http://ref.michigan.org/medc/services/workerscomp/

Due to the limited nature of information we have about your business, we recommend that you contact your business insurance agent to determine if you need to purchase workers' compensation insurance.

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