By: Kurt Dettmer, Senior Vice President, Insurance Sales & Business Development

A question insurance agents often receive is a simple one:

“Do I need to have a Workers’ Compensation Policy”?

Even if your Michigan business has just one employee, your business is required to carry workers’ compensation insurance. Carrying workers’ compensation insurance protects both you and your employees in case of injury or illness acquired at work.

If an employee is injured, workers’ compensation can provide the injured:

  • Wage replacement benefits
  • Medical treatment
  • Vocational rehabilitation
  • Other benefits

If you fall into any of these categories, your business must carry coverage:

  • all private employers regularly employing one or more employees for 35 hours or more per week for 13 weeks or longer during the preceding year
  • all private employers regularly employing three or more employees at one time (including part-time employees)
  • agricultural employers if they employ three or more employees 35 hours or more per week for 13 or more consecutive weeks
  • households employing domestic servants if they employ anyone 35 hours or more per week for 13 weeks or longer during the preceding year; and
  • all public employers.

Who isn’t required to obtain workers’ compensation?
Sole proprietors, partners in partnerships, and corporate officers of small, closely-held corporations are not required to be covered by workers’ compensation insurance. To confirm your status, you’ll need to contact the State of Michigan Department of Labor and Economic Opportunity (LEO) Office of Compliance & Employer Records Division at 517-284-8922 and discuss your circumstances. If permitted, you will be issued a WC-337 “Notice of Exclusion.”

What happens if I don’t get workers’ compensation coverage for my business?
There are severe penalties for the failure of an employer to provide workers’ compensation coverage.

First of all, if a worker is injured, he or she may sue the employer for damages in the civil court system. If the employer was at fault for the injury, this might result in the payment of a great deal of money by the employer.

Secondly, the Workers’ Compensation Agency actively enforces the Workers’ Disability Compensation Act. It has the authority to petition the court and seek an order prohibiting the company from employing any persons in their business until  proper workers’ compensation insurance coverage is obtained.

The employer may be subject to a fine of $1,000 or imprisonment for no less than 30 days, nor more than six months, or both. Each day for which the employer is uninsured is considered a separate offense.

If you feel you may need to discuss your needs with an endorsed Retailers Insurance agent, please visit our Agency Locator. Mention that you are a member of the Michigan Retailers Association and they will review your memberships for unique member credits.