When Does A Limited Liability Corp Needs Workers' Compensation?

F ollowing the legal procedures required when forming an LLC means filing the appropriate paperwork, obtaining business insurance and tracking income and expenses. But if there are employees of the new venture, business owners should make sure they obtain workers’ compensation coverage.

Required in all 50 states, workers’ compensation insurance reimburses an employee for an on-the-job injury. Each state differs on exemptions based on the number of employees, according to FindLaw.com. Jason Beahm writes that some states, such as California, will actually require workers’ compensation for a self-employed worker even if there are no employees, depending on the occupation.

Occupations are also classified differently, with much higher rates for riskier jobs, such as construction, while lower rates are applied for employees who work in an office.

Since worker’s compensation pays an injured employee regardless of fault, business owners can take a few steps to avoid rate increases.

"An employee can be solely responsible for an accident but still entitled to recovery workers’ compensation benefits," Beahm writes. "Therefore, it is certainly worthwhile to have an ongoing safety training program in place to help prevent accidents."

According to the Massachusetts labor law firm Kantrovitz & Associates, more than 15,000 workers are injured on the job every day.