Michigan workers’ comp lawyer explains how many employees are needed to trigger mandatory insurance coverage requirement.
We have over 100 years of combined experience handling Michigan workers’ comp cases. You do not want to see a letter from our office come across your desk. It means your employee has suffered a workplace accident and is seeking medical and/or wage loss benefits. This can cost you hundreds of thousands of dollars! Calling them an “independent contractor” and paying them with an IRS Form 1099 is not going to save you. In Michigan, you need to provide your employees with workers’ comp insurance even if you only have 1 employee.
Employee misclassification is a serious problem. It occurs when an employee is otherwise classified as an independent contractor. Michigan law is specific about who is an employee for purposes of workers’ comp. Services are considered “employment” when an individual meets the requirements of IRS Revenue Ruling 87-41. This 20-factor test looks at items such as hours, control, furnishing of tools and materials, or shared profits and losses. Whether a person maintains a separate business offering similar services to the public can also be a factor.
Do I need workers’ comp insurance for 1 employee in Michigan?
In Michigan, workers’ comp insurance is mandatory for private businesses that have 1 employee working 35 hours or more for 13 weeks or longer during the last 52 weeks. Penalties for not having coverage include civil fines and jail time. Officers and directors are personally liable for payment of workers’ comp benefits.
Businesses with no employees are generally not subject to Michigan workers’ comp law. It is possible to exclude yourself and certain family members by filing the appropriate documents. However, this is not always the smart thing to do considering how workers’ comp insurance coverage can save a person from financial ruin. It is also relatively inexpensive for most businesses.
Failure to purchase mandatory workers’ comp insurance in Michigan even for 1 employee can lead to significant financial obligations. Companies are still responsible for payment of medical and wage loss benefits if it is determined that a person is an employee. Officers and directors of an uninsured company are personally liable for payment of workers’ comp benefits. Additional penalties include civil fines and possible jail time up to 6 months as a criminal misdemeanor.
Business owners with 1 or more employees are wise to follow the applicable Michigan workers’ comp insurance law. We have seen some companies go bankrupt because they were unable to pay a relatively small amount for medical and wage loss benefits. We have also been successful in collecting from business owners who close down and move assets into family member’s names.
Have questions? Contact our Michigan workers’ comp lawyers now
If you have questions on whether or not you need workers’ comp insurance in Michigan for 1 employee or more, call now or fill out our contact form for a free consultation. There is absolutely no cost or obligation. Our attorneys are here for you.
Our attorneys have been exclusively helping injured workers in Michigan for more than 35 years. Our attorneys can help you better understand Michigan work injury laws and what happens after someone has been hurt on the job. To see what our own clients have to say about the caring, compassion, and communication they received from us, you can read in their own words about their experience here on our testimonials page from clients we have helped.
Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (844) 316-8033 for a free consultation today.