Workers' Compensation Insurance InformationAgency: Licensing and Regulatory Affairs
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.
Exclusion Form An employer may use an exclusion form only if all its employees can be excluded according to the Workers' Disability Compensation Act and no subcontractors are used in the operation of the business. 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 employer insurance requirements, including subcontractors, general contractors and independent contractors in publication WC-PUB-002. You may obtain a copy of the Notice of Exclusion form (WC-337) by contacting the Workers' Compensation Agency (WCA) at 517-284-8922.
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 on the Department of Insurance and Financial Services website.
2) Individual self-insurance. Some employers who are financially sound (and usually quite large) are “self-insured.” An employer can only be self-insured if it obtains permission from the Agency. The Agency requires employers to demonstrate a reasonable position of solvency and ability to pay claims when due as a condition in order to be self-insured. Select to view the self-insured employer listing.
3) Group self-insurance. This provides an alternative to commercial insurance. 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. Click here to view a current listing of group self-insurers.
The premium rates for workers' compensation insurance are competitively determined. These rates are based on the classification of your employees to be covered. The classification refers to the type of work the individuals perform. Insurance companies establish a premium rate for each classification. However, there are often many adjustments to these basis rates.
Because insurance companies do not all charge the same rate for the same workers’ compensation coverage, it is important for your business, either directly or through its insurance agent, to shop around for the best price on workers’ compensation insurance. When shopping for insurance, price is an important consideration but you should also inquire concerning the services the insurance company will provide such as claims servicing, prevention and loss control.
Contact the Workers' Compensation Agency