When Are Small Business Owners Covered by Workers’ Comp Insurance?
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When Are Small Business Owners Covered by Workers’ Comp Insurance?

Owners of small businesses risk more than just wage loss if they get injured at work. Their business profits and customer relationships could be affected, impacting them for years to come. If you are a small business owner, figure out if you need workers’ compensation insurance to cover you and your employees. The insurance will pay for medical expenses and wage loss in case of a workplace injury.

Not all small businesses have to purchase workers’ compensation insurance. But just because the law does not require it should not keep you from considering the purchase. Specifically, these small business owners do not need insurance for themselves:

  • Sole proprietors and their family members
  • Executive officers of closely held corporations with less than 22,880 hours of payroll in the previous calendar year, if the executive officer owns at least 25 percent of the stock of the corporation
  • Close family members of these executive officers of closely held corporations, including family employed by the corporation
  • Managers of limited liability companies with ten or fewer members and having less than 22,880 hours of payroll in the preceding calendar year, if the manager owns at least a 25 percent membership interest in the limited liability company
  • Close family members of these managers of limited liabilities companies, including family employed by the company
  • Members of limited liability companies, in some circumstances

A closely held corporation refers to a corporation with stock held by 10 people or less.

As you can see, many small business owners do not need insurance if they do not want to purchase it. However, any small business owner who has employees who are not close family members, or who operates in a high-risk industry, should strongly consider purchasing insurance. Most small businesses can elect coverage, which gives all employees protection under Minnesota’s workers’ compensation laws should they get hurt at work.

Coverage elections help employees because the employees get their medical costs and wage losses covered by insurance while they are injured. This saves small businesses from losing valuable employees to larger companies. It also encourages businesses to promote safe working conditions, which keep insurance premium costs lower. However, small businesses may be reluctant to report injuries to their insurance companies, for the same cost-saving reason.

Need help getting workers’ compensation for your injury? Joe Osterbauer, Esq. and the Osterbauer Law Firm stand up for injured Minnesota workers’ rights. Joe’s 27 years of workers’ compensation experience and his team’s speedy service combine to get clients the results they need. To schedule a free consultation, visit Osterbauer Law Firm online or call Joe’s office at (612) 334-3434.