Workers’ Comp Owner and Officer Exemptions by State: When the Owner on the Truck Has to Be Covered

You’re the owner, you’re on the truck every day, and the workers’ comp quote came back at $4,000 because the carrier put your own payroll in it. Whether you can take yourself out depends on your entity type and your state, and in the trades it also depends on whether your state treats HVAC, plumbing and electrical as “construction,” which flips the headcount threshold to one in Florida, Tennessee, Missouri and New Mexico and puts you in an exemption registry in Florida and Tennessee. In New Jersey and Ohio a one-person S-corp can’t opt out at all. In California, the owner exemption is being phased out for every licensed contractor by January 1, 2028, and it’s already gone for HVAC, concrete, asbestos, tree and roofing licensees.

This guide covers all 50 states and DC as of October 2026: how many employees trigger mandatory coverage (and the construction exceptions), which owners are excluded automatically, which officers and LLC members can file to opt out and on what ownership terms, the states that make one-person subs register for an exemption certificate, and what the general contractor who hires you is going to check before releasing a payment.

How Owner Exemptions Work

Workers’ comp covers employees. The question for an owner is whether the law treats you as one, and the answer tracks your entity type:

• Sole proprietors and general partners aren’t employees of themselves. Every state excludes them from mandatory coverage and from the headcount, and every state lets them elect in (usually at a deemed payroll the carrier sets, $50,000–$70,000 a year in most states). Florida and Tennessee are the exceptions for construction: a sole proprietor on a Florida job site must carry a policy on himself, and a Tennessee one must be on the Exemption Registry.
• Corporate officers (including S-corps) are employees of the corporation in every state. Most states let officers opt out by filing a form with the carrier or the state agency, and 17 restrict who qualifies: a minimum ownership share (10% in California, Colorado, Idaho, Louisiana, Michigan, New Mexico and Oklahoma; 20% in Maine, Montana and Tennessee’s registry; 25% in Iowa, Massachusetts, Minnesota and Nebraska; 50% in Hawaii), a cap on how many (two in Wisconsin, three in Florida construction, four in Iowa, five in Georgia, Tennessee and Utah), or both. New Jersey and Ohio don’t allow officer exclusion; New York allows it only through the carrier, and exempts a corporation outright only when one or two officers own all the stock and there are no other employees.
• LLC members are the messy category. About half the states treat members like partners (excluded, may elect in); about a dozen treat them like officers (covered, may exclude on the same ownership terms); the rest key on the LLC’s tax election, member count or industry (Georgia counts construction LLC members as employees; Michigan and Minnesota apply the officer rule only to LLCs with 10 or fewer members).
• Family members are employees in nearly every state once they’re paid, with narrow exclusions for a spouse or children in the household in Idaho, Minnesota, Maryland and a few others.

Two rules cut across all of it. First, an owner who opts out can’t collect: not from the business’s policy, and in most states not from the GC’s either. Second, in most threshold states excluded owners still count toward the headcount (Georgia, North Carolina, Virginia, Tennessee, Alabama, Mississippi, South Carolina, Missouri, New Mexico), so filing the exemption doesn’t get a three-owner shop under the line.

Employee Thresholds by State

The number of employees (counted as the state defines them) at which coverage becomes mandatory. Thirty-four states and DC require it at one.

The 12 Construction-Rule States

States where the rules for trades employers differ from the general rules: a lower threshold, an owner exemption registry, a contractor-licensing check, or a counting rule that sweeps in subs or members.

The Exemption Trap: Who Pays When You Get Hurt

The exemption saves the premium on your own payroll, typically $1,500 to $6,000 a year for a trades owner at the carrier’s deemed wage. What it costs you is coverage. An excluded owner who falls off a ladder has no wage replacement, no medical through comp, and in most states no claim against the GC’s policy either. Health insurance will often deny or subrogate on a work injury. The alternatives are: elect in (most expensive, full benefits); an occupational accident policy ($50–$150 a month for a one-person shop, with caps and exclusions comp doesn’t have); or a disability policy that doesn’t exclude occupational injuries. For an owner who is on the tools every day in a trade with ladders, electricity or gas, the exemption is a bet on not getting hurt, and the premium savings rarely cover a single surgery.

The second trap is the helper. In Florida, Tennessee, Missouri and New Mexico, the first employee in a construction trade triggers coverage; in Michigan one full-timer does; in Wisconsin $500 of wages in a quarter does; in Virginia a one-person sub you use regularly counts. The owner who says “I’m exempt” and has a nephew riding along is uninsured in those states the day the nephew gets hurt, and the penalty in Florida is twice the premium evaded for two years, in Missouri three times, in Pennsylvania a felony. See the 1099 helper in the van trap for the misclassification side of the same problem.

What the GC Checks

Every state has a statutory-employer rule: a contractor that hires an uninsured subcontractor is liable for the sub’s injured workers as if they were its own. That’s why GCs, property managers and commercial customers demand proof before the first payment, and the proof is state-specific:

• A certificate of insurance (ACORD 25) naming them as certificate holder, from the carrier, with the policy number and dates. Universal.
• An exemption on file with the state where the state issues one: Florida (online lookup), Tennessee (registry search), Montana (ICEC database), Oklahoma (Affidavit of Exempt Status, annual), Utah (Coverage Waiver, annual), New York (CE-200 per permit), California (CSLB exemption certificate, through 2027), Delaware (permanent sole-proprietor certificate), Oregon (CCB exempt status on the license).
• The officer-exclusion form where the state has one but no certificate: Colorado WC 43, Pennsylvania LIBC-513, Connecticut 6B, Rhode Island DWC-11-C, Vermont Form 29, Georgia WC-10, North Carolina Form 19, Virginia 16A, South Carolina Form 15, Michigan WC-337, Massachusetts Form 153, Kansas K-WC 132.
• A policy anyway, because the GC’s own carrier audits it for uninsured sub payroll and charges premium on it. Many GCs refuse exempt subs for that reason, and in Texas most commercial GCs require comp from subs even though the state doesn’t.

What Changed in 2025–2026

State-by-State Breakdown

Red chips mark states with construction-specific coverage or exemption rules that change the answer for a trades employer; amber marks states where owner or officer exclusion is restricted (ownership minimums, caps, or no opt-out) or where the state runs a monopoly fund with officers covered; grey marks states where owners are excluded by default and officers may opt out freely, or where coverage is optional. Each block gives the coverage trigger, the owner and officer rules, and the trades angle, with a link to the agency.

Statutes, thresholds, forms and fees current as of October 2026, compiled from state workers’ compensation agency materials, contractor licensing boards and statutes. Ownership percentages and officer caps are the statutory minimums; individual carriers may impose additional underwriting limits on exclusions. Deemed-wage figures for elective owner coverage vary by carrier and year. This is a survey for operating a business, not advice on a specific policy, entity or claim.

Running the Business

• The whole insurance stack: contractor insurance requirements by state, HVAC insurance requirements by state and electrician insurance requirements by state cover GL, bonds and auto alongside comp.
• The helper question: the 1099 helper in the van trap and drug testing laws by state (which covers the post-accident presumptions that defend the claim).
• Licensing ties: new contractor laws by state tracks the licensing-board coverage checks as they change.
• The paperwork: tax deductions for trades business owners covers where the premium and the occupational-accident policy go on the return.

FAQ

Do I need workers’ comp if I’m the only person in my business?

As a sole proprietor or partner, no, in every state; you’re not your own employee. As the sole officer of a corporation, you’re an employee of the corporation and need to either carry a policy or file the state’s officer exclusion, except in New Jersey and Ohio (no opt-out for officers) and New York (exempt only if one or two officers own all the stock and hold all offices). The trades exceptions: in Florida and Tennessee a sole proprietor in a construction trade must carry a policy or hold an exemption certificate on the registry; in California, roofing, HVAC, concrete, asbestos and tree-service licensees need a policy regardless, and every CSLB licensee will on January 1, 2028.

How many employees before workers’ comp is required?

One, in 34 states and DC. Three in Arkansas (two for building construction), Georgia, New Mexico, North Carolina, Virginia and Wisconsin (or $500 of wages in a quarter), and Michigan (or one employee at 35 hours a week for 13 weeks). Four in Florida and South Carolina. Five in Alabama, Mississippi, Missouri and Tennessee. Kansas uses a $20,000 annual payroll test. Florida, Missouri, New Mexico and Tennessee drop to one employee for construction trades. Texas is optional, South Dakota is elective, and Wyoming requires it only for extrahazardous occupations (which include nearly all trades). In most threshold states, officers and LLC members count toward the number even if they’ve filed an exclusion.

Does HVAC, plumbing or electrical count as ’construction’ for the lower threshold?

Yes, in all four one-employee states. Florida defines the construction industry by NCCI class code and includes HVAC, plumbing, electrical, roofing, carpentry, concrete, painting, insulation, irrigation and most installation work. Tennessee’s construction services provider definition likewise tracks construction class codes. Missouri’s covers erecting, demolishing, altering or repairing improvements to real property. New Mexico’s applies to anyone licensed by the Construction Industries Division, which licenses mechanical, plumbing and electrical contractors. Locksmiths, appliance repair, cleaning and pest control generally fall outside these definitions and use the general threshold.

Can a corporate officer opt out of workers’ comp?

In 47 states, yes, by filing a form with the carrier or the state. The restrictions: minimum ownership of 10% (California, Colorado, Idaho, Louisiana, Michigan, New Mexico, Oklahoma), 20% (Maine, Montana), 25% (Iowa, Massachusetts, Minnesota, Nebraska) or 50% (Hawaii); caps of two officers (Wisconsin closely held), three (Florida construction), four (Iowa), five (Georgia, Tennessee, Utah); closely-held-only (Minnesota, Wisconsin, Maryland, Missouri); and Michigan’s rule that all employees must be excludable officers. New Jersey and Ohio allow no officer opt-out; New York allows it only through the carrier. An officer who opts out can’t collect benefits for a work injury.

Are LLC members covered by workers’ comp?

It depends on the state. About half treat members like partners: excluded automatically, may elect in (Alabama, Arizona, Connecticut, Idaho, Indiana, Iowa, Kentucky, Mississippi, Missouri, Nebraska, New Jersey, Ohio for partnership-taxed LLCs, Oregon, Pennsylvania, South Carolina, Tennessee non-construction, Texas, Utah, Vermont, Virginia, Washington, Wisconsin, Wyoming). About a dozen treat members like officers: covered, may exclude on the same ownership terms (California managing members, Colorado, Florida, Kansas, Louisiana, Minnesota, New Mexico, North Carolina for four-plus members, Oklahoma, Illinois). Georgia counts construction LLC members as employees unless they file a WC-10. Several states key on the LLC’s tax election, which is why reorganizing from an S-corp to an LLC doesn’t change the answer in New Jersey or Ohio.

What is the Florida workers’ comp exemption and how do I get one?

A Notice of Election to Be Exempt filed online with the Division of Workers’ Compensation. In construction, it’s available only to corporate officers and LLC members who own at least 10% of the entity, maximum three per business, $50 per person, valid two years; sole proprietors and partners in construction can’t get one and must carry a policy. In non-construction, officers and members file for free with no cap, and sole proprietors and partners are excluded without filing. The exemption is searchable online, and compliance investigators check it on job sites; working without it or a policy brings a stop-work order and a penalty of twice the premium evaded for two years, $1,000 minimum.

Is the California requirement that all contractors carry workers’ comp in effect?

Partly. Since 2011, C-39 roofers have needed coverage regardless of employees. Since January 1, 2023, so have C-8 concrete, C-20 HVAC, C-22 asbestos and D-49 tree service licensees. SB 216 set January 1, 2026 as the date every CSLB licensee would need a policy, but SB 1455 (2024) moved that to January 1, 2028, and existing exemption certificates for other classifications remain valid through December 31, 2027 as long as the licensee has no employees. Officers and managing members who own at least 10% can waive their own coverage under SB 189, so a one-owner HVAC corporation needs a policy but can carry it at the minimum with the owner waived.

If I’m exempt and I get hurt on a job, who pays?

Usually nobody. An excluded owner has no claim against the business’s policy (he’s not covered) and, in most states, no claim against the general contractor’s policy, because the statutory-employer rule reaches the sub’s employees, not the sub’s owner. Health insurance frequently excludes or subrogates work-related injuries. Options are electing in (full benefits at a deemed payroll), an occupational accident policy (cheaper, with benefit caps), or a disability policy without an occupational exclusion. In Florida, an exempt officer who’s hurt also can’t sue the GC in tort; the exemption is a waiver.

Does the GC need my workers’ comp certificate if I have no employees?

Legally the GC is liable only for your employees, so a true one-person sub creates no exposure, but the GC’s own carrier audits payments to uninsured subs and charges premium on them unless the GC produces a certificate or a state exemption document. That’s why GCs require one of: a certificate of insurance, a state exemption (Florida, Tennessee registry, Montana ICEC, Oklahoma affidavit, Utah waiver, New York CE-200, California CSLB exemption, Oregon CCB exempt status, Delaware certificate), or the state’s officer-exclusion form. Many GCs refuse exempt subs outright and require a ghost or minimum-premium policy.

What’s a ’ghost policy’?

A workers’ comp policy with the owner excluded and no employee payroll, written at the state minimum premium (typically $750 to $1,500 a year). It covers nothing, but it produces a certificate of insurance, which satisfies GCs and licensing boards, and it’s priced on the assumption that an audit will find no payroll. If the audit finds a helper, the carrier charges the real premium retroactively. Ghost policies are common in New York, New Jersey, Pennsylvania, Illinois and Texas; Florida and Tennessee’s exemption systems mostly replace them.

Bottom Line

If you’re a sole proprietor or partner, you’re out of comp automatically everywhere except on a Florida or Tennessee construction site. If you’re an officer of a corporation, you’re in until you file, you can’t file in New Jersey or Ohio, and in 17 states you need a minimum ownership share or there’s a cap. If you’re an LLC member, check your state, because it’s a coin flip which rule applies. And if you’re in a trade the state calls construction in Florida, Tennessee, Missouri or New Mexico, your first helper puts you on the hook for a policy regardless of how the owners are handled.

Then decide whether the exemption is worth it. For an owner on the tools, the premium you save is the medical and wage coverage you lose, and the GC will probably require a policy anyway. If you do opt out, keep the state form or certificate current (Florida and Tennessee expire in two years, Oklahoma and Utah in one), carry an occupational accident policy on yourself, and keep job and crew records clean enough that the carrier’s audit and the GC’s certificate request take five minutes instead of a week.