When is Your Business in Maine Required to Have Workers' Compensation Insurance?

If you have a business with employees in Maine, you generally must have workers' compensation insurance coverage. But there are some exceptions. As indicated by the State of Maine Bureau of Insurance, a sole proprietor is not required to carry workers' compensation for him or herself, but would be required to have coverage for employees. Family members who work in the business can be excluded if they waive workers' compensation benefits in writing.

Owners of limited liability companies are not required to be covered. Owners of at least 20% of the voting shares of a corporation can waive workers' compensation benefits for themselves. Elected or appointed executive officers of nonprofit corporations are not covered by workers' compensation unless they are specifically included in the policy contracted for other workers.

Employers who have seasonal or causal workers engaged in agriculture or aquaculture are not required to have workers' compensation if they carry at least $25,000 in employer's liability insurance with at least $5,000 to cover medical payments. If an employer has six or fewer regular agricultural or aquaculture workers, workers' compensation is not required if the employer carries at least $100,000 in employer's liability insurance times the number of full-time equivalent employees or $5,000 in medical payments coverage.

An employer is not required to have workers' compensation insurance coverage for independent contractors that provide services to the business. But as pointed out by the Maine Workers' Compensation Board, a number of factors are considered in determining whether someone is an independent contractor. Having a contract with that person is only one of the factors. An employer and a worker cannot agree that the worker is an independent contractor. The Maine Workers' Compensation Board will ultimately determine the worker's relationship to the employer.

An employer can request the Maine Workers' Compensation Board to make a predetermination whether one or more workers are independent contractors. Forms are available for requesting this predetermination under Application for Independent Contractor Status on the Maine Workers' Compensation Board website.

The Maine Workers' Compensation Board can impose penalties when an employer does not carry workers' compensation when required. The employer could be held liable for the payments required for a workers' compensation claim. And the employer could be sued for work-related injuries.

You can purchase a workers' compensation policy through a private insurance company. As pointed out by Work World, there is a state fund for workers' compensation insurance in Maine, which is the Maine Employers' Mutual Insurance Company (MEMIC). According to the State of Maine Bureau of Insurance, MEMIC is required to provide workers' compensation insurance to employers who cannot obtain it elsewhere.

As explained by the State of Maine Bureau of Insurance, the cost of workers' compensation coverage varies from one insurance company to another. The factors that affect the premium include the business classification according to the associated hazards, with some standard exception classifications. And the employer's experience rating, based on prior workers' compensation claim history will also affect the premium.

Sources:

An Employer's Guide to Workers' Compensation Insurance in Maine, State of Maine Bureau of Insurance

Application for Independent Contractor Status, Maine Workers' Compensation Board

Independent Contractors, Maine Workers' Compensation Board

MEMIC