Do I Need Workers’ Compensation Insurance in Michigan? A Guide for Small Businesses
For most Michigan employers, having workers’ compensation insurance is a legal requirement. Understanding the rules is crucial for protecting your business and your employees. This guide covers the key criteria for Michigan workers’ comp and outlines the potential risks of going without it.
When is workers’ comp mandatory in Michigan?
Your business must carry workers’ compensation coverage if you meet any of the following conditions:
- Three or more employees at any single time. This includes part-time staff.
- One or more employees who work 35 hours or more per week for 13 weeks or longer during a year.
- You are a public employer, such as a government agency or a school district.
Are there exemptions for small businesses?
Yes, some employers are not required to carry workers’ comp insurance. However, if you do hire employees, the requirements listed above will apply.
- Sole proprietors and partners are not considered employees of their own business and are not required to cover themselves.
- Family members may be exempt in specific situations, though it’s important to check the details.
- Agricultural and domestic workers have special rules that depend on the number of hours they work.
What are the risks of skipping workers’ comp?
Operating without the proper insurance is a serious offense in Michigan and can lead to major consequences.
- Hefty fines: You could face fines of up to $1,000 for each day you are uninsured.
- Employee lawsuits: If an employee is injured on the job, they can sue you directly. You would be personally liable for their medical bills and lost wages.
- Business shutdown: The state can issue a stop-work order, forcing your business to shut down until you obtain the required insurance.
Is workers’ comp a smart choice even if you’re exempt?
Even if your business falls under an exemption, carrying workers’ compensation insurance is often a wise decision. It provides essential protection from financial devastation in the event of a workplace injury. It’s an investment in your company’s security and your employees’ well-being.