Does Michigan require workers’ compensation insurance?
Yes, for most businesses with staff. Michigan requires workers' compensation once a private employer regularly has 3 or more employees at one time, part-timers included, or even 1 employee who has worked 35 or more hours a week for 13 weeks in the past 52 (MCL 418.115). A sole proprietor is never their own employee. A business whose only workers are excludable owners can file a Notice of Exclusion (WC-337) instead of buying a policy.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
How many employees before Michigan requires workers' comp?
Michigan's Worker's Disability Compensation Act applies to a private employer that regularly employs 3 or more employees at one time, or fewer than 3 if at least one has worked for it 35 or more hours a week for 13 weeks or longer in the preceding 52 weeks (MCL 418.115). The Workers' Disability Compensation Agency says part-time employees count toward the three. Farms and household employers follow separate full-time-hours rules in the same section and MCL 418.118.
Source: MCL 418.115, checked .
Which owners, officers, and family members are exempt in Michigan?
A sole proprietor is never an employee of their own business, but partners, corporate officers, and LLC members who are managers are employees, per the agency. Under MCL 418.161, a policy can exclude named partners, or the owner's spouse, child, or parent, by endorsement. An officer owning at least 10% of a corporation with no more than 10 stockholders, and a manager-member owning at least 10% of an LLC with no more than 10 members, can each opt out by written notice to the carrier, with the company's consent endorsed on it.
Because owners of a corporation, LLC, or partnership count as employees, the agency's Employer Insurance Requirements booklet (WC-PUB-002) tells those businesses to keep either a policy or a filed WC-337 on record. If even one worker cannot be excluded, the business needs a policy, though it can still exclude the eligible owners from it to save premium.
Source: MCL 418.161, checked .
What happens to a Michigan employer with no workers' comp?
An employer that fails to secure coverage is guilty of a misdemeanor, with a fine of up to $1,000, up to 6 months in jail, or both, and each day is a separate offense (MCL 418.641). The agency's director can also go to circuit court for an order barring the business from employing anyone until it is insured, plus a civil fine of up to $1,000 for each day uninsured in the past 3 years (MCL 418.645). An injured employee can also sue the uninsured employer directly, and officers and directors are personally liable for what the company cannot pay (MCL 418.647).
Source: MCL 418.641, checked .
Who enforces workers' comp in Michigan?
The Workers' Disability Compensation Agency, part of the Department of Labor and Economic Opportunity, enforces the requirement. Its Insurance Compliance Division keeps coverage records for Michigan employers, including those that have filed exclusions, runs the public Insurance Coverage Look-up, and pursues employers who go uninsured. The Department of Insurance and Financial Services regulates the carriers, not the employers.
Source: Michigan WDCA, Insurance Requirements, checked .
Where do Michigan employers buy coverage?
Michigan is a private-market state with no state fund to buy from. Under MCL 418.611 an employer insures with a carrier authorized to write workers' compensation in Michigan or gets the agency director's approval to self-insure, alone or through a group fund. An employer that cannot get coverage the ordinary way goes to the Michigan Workers' Compensation Placement Facility, the assigned risk pool every Michigan workers' comp carrier must join under MCL 500.2301 and which CAOM administers.
Source: MCL 500.2301, checked .
Who sets the class codes and rates in Michigan?
Michigan is not an NCCI state. Under MCL 500.2407 a data collection agency designates one advisory organization to collect loss data from every insurer and compile pure premiums; that organization is the Compensation Advisory Organization of Michigan (CAOM), which the Workers' Disability Compensation Agency names as the source for class codes and experience modification factors. Each carrier sets its own rates, classifications, and merit rating plan within the rules of MCL 500.2411, so the same business can price differently by carrier.
Michigan bars the single-enterprise rule. If a business runs separate operations and gives its carrier payroll for each, the carrier must, on request, classify each operation's employees under its own code (MCL 500.2411(4)).
Source: Michigan WDCA, Employers and Business Owners, checked .
Is there an exemption or waiver form in Michigan?
Yes. A business whose employees are all excludable, meaning only partners, only 10% officers of a small corporation, only 10% manager-members of a small LLC, or only a sole proprietor's spouse, child, or parent, and that uses no subcontractors, can file a Notice of Exclusion (WC-337) with the agency instead of buying a policy (MCL 418.161(5)). The form is not online: call the agency at 517-284-8922 to confirm you qualify and get a copy. It counts only once the agency has stamped it as on file.
A sole proprietor with no employees does not file anything; the agency returns WC-337 forms sent in by one. A general contractor can still require a certificate by contract, and under MCL 418.171 a contractor who hires an uninsured subcontractor becomes liable for that sub's injured workers.
Source: Michigan WDCA, WC-337 Notice of Exclusion, checked .
Sorting out Michigan workers' comp for your business
Tell Redoubt what the business does, who works in it, and what the Michigan requirement in front of you says. We will say whether a policy, a waiver, or an exclusion fits.
This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.
Workers’ comp requirements in every state
Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.
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The hub, and the Michigan pages that go deeper
Michigan workers’ comp FAQ
Do part-time employees count toward Michigan's three-employee rule?+
Yes. The Workers' Disability Compensation Agency counts part-time employees toward the 3 at one time in MCL 418.115. One full-time employee past 13 weeks triggers it too.
Can a Michigan LLC owner opt out of workers' comp?+
A manager-member who owns at least 10% of an LLC with no more than 10 members can opt out by written notice to the carrier under MCL 418.161(3). If every worker in the LLC qualifies and it uses no subcontractors, it can file a WC-337 Notice of Exclusion with the agency instead of carrying a policy.
Does a Michigan sole proprietor with no employees need a policy or an exclusion form?+
Neither under the Act: a sole proprietor is never their own employee, and the agency returns exclusion forms filed by one with no employees. A general contractor may still require a certificate by contract; the agency does not regulate that.
Can my auditor charge premium for a sole-proprietor subcontractor?+
Not for a sole proprietor with no employees, according to the agency's WC-PUB-002 booklet, but you have to prove it: the sub's federal ID number, your written contract, a sworn no-employees statement, or 1099s. A sub with employees needs its own certificate or a filed WC-337, or its payroll can land on your policy.