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Do Small Business Owners Without Employees Need Workers’ Compensation?

Do Small Business Owners Without Employees Need Workers’ Compensation?

Workers' Compensation

Knowing the different legal requirements and regulations that may apply to your business is essential as a small business owner. One of the more confusing topics is workers’ compensation insurance, which is often required for companies with employees.

But what if your business doesn’t have any employees? Do you still need to purchase workers’ compensation insurance? Read on to learn about workers’ compensation insurance and who needs it.

What Is Workers Compensation?

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Workers’ compensation insurance covers medical costs and lost wages if an employee becomes injured or sick while working in connection with their job duties. It can also provide death benefits in some cases.

Generally, employers are required by law to carry this type of insurance to protect their workers should they get injured or become ill while working.

Who Needs Workers’ Compensation?

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Typically, businesses with one or more full-time employees are required to purchase workers’ compensation insurance. However, the exact laws vary from state to state, so it’s essential to check the specific requirements in your area.

For example, some states require businesses with three or more employees to buy workers’ comp insurance. Many states allow sole proprietors without employees to opt out of purchasing workers’ comp insurance as long as they don’t hire anyone else while doing business.

Insurance companies like Cerity cover small businesses starting with simple policies, month-to-month pricing, and no sneaky fees.

Do Small Business Owners Need Workers’ Compensation?

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In most cases, if you do not employ other people, you will not be required to carry workers’ comp insurance. As such, if you operate as a sole proprietor and do not hire any additional help, you would not typically need to purchase such insurance. However, there may be certain exceptions depending on your situation.

See Also

If you employ subcontractors or independent contractors, these individuals may not be considered “employees” but could still be held liable for injuries suffered on the job. Additionally, specific industries such as construction are subject to unique rules regarding workers’ comp even when there aren’t employees involved. It’s best to contact your state’s department of labor to determine if there are any unique rules in your case.

Do I Need Workers Comp For Part-Time Employees?

Another consideration is whether or not you’re employing part-time or seasonal employees. While you may not need workers’ comp insurance if you’re not employing full-time staff, many states still require businesses to carry workers’ comp insurance for their part-time employees. The exact rules vary from state to state.


Ultimately, whether or not you need workers’ comp insurance as a small business owner depends on your particular circumstances and the requirements of your state. Although it might seem unnecessary, remember that having proper protection in place can save you time and money if someone gets hurt while working for you.

It’s always a good idea to consult with an attorney or accountant to ensure you understand your options before making a decision. And, if you ever have questions or concerns about workers’ compensation, reach out to Cerity or your local Department of Labor office to speak with someone directly who can provide you with the information you need.


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