Who is Covered by Workers’ Compensation Insurance

Workers Comp Article to Help Stomp Out High WC CostsFiguring out who is considered a covered employee for purposes of workers compensation can often be a tricky matter and sometimes even a source of litigation when the subject of a claim. Each jurisdiction varies and each case should be evaluated on its own merits. That said, there are similar basic principles to reference in most jurisdictions in making the determination:

Majority of Employees Typically Covered by Workers’ Comp

The vast majority of employees in a typical employee/employer relationship are covered. For example, checkers at a grocery store, factory workers, fast food workers and hospital nurses are generally all covered. Very small employers with perhaps 3 – 5 or fewer employees are not always required by law to carry workers compensation insurance. Owners and corporate officers often are allowed to opt out of coverage.

Independent Contractors / Statutory Employees

Independent contractors and subcontractors seem to create the most questions. Employers should require proof of workers compensation insurance when hiring independent contractors. If the contractor proves ultimately to be uninsured, chances are the employer hiring that contractor will become responsible for the injuries of the contactor’s employees then referred to as statutory employees. The same applies when hiring an individual who presents himself as a sole independent contractor, as often happens, for example in the long-haul trucking industry.

Employee/Employer Relationship Evaluation

Circumstances to consider in evaluating an employee/employer relationship include: 

  1. The amount of payroll for the company
  2. The frequency and severity of injuries
  3. The risk classification of the employees
  4. The base rate
  5. The company’s claim history
  6. Discounts provided by the insurance company


Volunteers can at times be considered employees and be allowed benefits when there is some consideration provided to the volunteer for their services, including meals, transportation or room and board.

Loaned or Borrowed Employees

Loaned or borrowed employees also may create a special set of circumstances in considering the employer/employee relationship.

Causal Employees

Usually exempt and not considered employees are causal employees – those earning less than a certain dollar amount – for example, $1,500 annually for domestic staff and farm laborers.

Employees Covered by Federal Employer’s Legislation

Generally speaking, employees covered by federal employer’s legislation (Railroad Workers, Longshoreman and Harbor Workers Act and Jones Act) are exempt or not covered by state workers’ compensation statutes.

Important to Understand Differences

Understanding the differences in all of these situations is important both in the application process and purchase of workers compensation insurance as well as when it comes time to consider payment of a claim.

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