Does Montana require workers’ compensation insurance?
Yes. Montana requires workers' compensation from the first employee: under MCA 39-71-401, an employer with any employee under any contract of hire, written or oral, must insure through a private carrier, Montana State Fund, or self-insurance. Sole proprietors, working partners, and LLC members are exempt from covering themselves, but one who regularly works away from their own business location needs either a policy or an Independent Contractor Exemption Certificate.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
How many employees before Montana requires workers' comp?
Montana has no minimum head count. The Workers' Compensation Act applies to all employers and employees, and an employer with even one employee must elect coverage under plan No. 1 (self-insurance), No. 2 (a private insurer), or No. 3 (Montana State Fund). The Department of Labor & Industry says that includes full-time, part-time, seasonal, and occasional workers. Household and casual employment are outside the Act unless the employer elects coverage.
Source: MCA 39-71-401, checked .
Which owners, officers, and family members are exempt in Montana?
MCA 39-71-401(2) leaves out sole proprietors, working partners, and working members of a member-managed LLC, unless they elect coverage. A corporate officer or manager of a manager-managed LLC is exempt without any filing if they own 10% or more of the company, or less when combined with close family members' shares; the company can cover them by written notice to its board and its insurer. A family member the employer can claim as a dependent for federal taxes, and a spouse covered by the federal marital-status rule, are exempt too.
Naming an employee an officer, partner, or LLC member just to exempt them from coverage does not work under MCA 39-71-401(5). An exempt owner can still ask the insurer to cover them, and a hiring contractor may require it.
Source: MCA 39-71-401(2), checked .
What happens to a Montana employer with no workers' comp?
Under MCA 39-71-504, the Department can bill an uninsured employer a penalty of up to double the premium it would have paid Montana State Fund on its Montana payroll for up to the past three years, or $200, whichever is greater, plus every benefit the Uninsured Employers' Fund pays an injured worker. The Department also orders the business to cease operations until it is insured (39-71-507), and ignoring that order is a misdemeanor, each day a separate offense.
An injured worker of an uninsured employer can also sue the employer directly, and the employer loses the usual defenses of the worker's own ordinary negligence, a coworker's fault, and assumed risk (MCA 39-71-509). A prime contractor that ignores the Department's order to stop an uninsured subcontractor's work, and then its own, faces up to $1,000 a day.
Source: MCA 39-71-504, checked .
Who enforces workers' comp in Montana?
The Montana Department of Labor & Industry enforces the requirement through the Workers' Compensation Regulations section of its Employment Standards Division. That section educates employers, enforces compliance, runs the Uninsured Employers' Fund and its field auditors, keeps the coverage verification lookup, and issues Independent Contractor Exemption Certificates.
Source: Montana DLI, Workers' Compensation Regulations, checked .
Where do Montana employers buy coverage?
Montana has a competitive state fund. An employer can buy from any private insurer authorized in Montana (plan No. 2), from Montana State Fund (plan No. 3), or qualify to self-insure (plan No. 1). Under MCA 39-71-2313, Montana State Fund must insure any Montana employer that requests coverage, unless the employer has an unpaid default with the fund, so it works as the guaranteed market for businesses private carriers decline.
Source: MCA 39-71-2313, checked .
Who sets the class codes and rates in Montana?
Montana is an NCCI state. MCA 33-16-1023 has the Insurance Commissioner designate one advisory organization whose classification system and experience rating plan every carrier must follow, and NCCI files Montana's loss costs and publishes its annual Montana state advisory report. Class codes and experience mods come from NCCI; Montana State Fund and each private carrier set their own rates on top.
Source: NCCI, State Advisory Resources: Montana, checked .
Is there an exemption or waiver form in Montana?
Yes, for owners who work at other people's sites. A sole proprietor, working partner, or LLC member who regularly works away from their own fixed business location must either elect coverage on a policy or hold an Independent Contractor Exemption Certificate (ICEC) under MCA 39-71-417. The Department takes applications online with a nonrefundable $125 fee and business documentation for each occupation listed, and a certificate runs two years (MCA 39-71-417).
An ICEC covers only the person named on it and only in the occupations it lists. The Department can fine an independent contractor up to $5,000 per violation for working without an ICEC or coverage, and the day the owner hires anyone, a policy is due for that employee.
Source: Montana DLI, Independent Contractor Exemption Certificate Program, checked .
Sorting out Montana workers' comp for your business
Tell Redoubt what the business does, who works in it, and what the Montana 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 Montana pages that go deeper
Montana workers’ comp FAQ
Do I need workers' comp in Montana with only one employee?+
Yes. MCA 39-71-401 requires any employer with an employee under any contract of hire to be insured, and the Department of Labor & Industry counts part-time, seasonal, and occasional workers. Coverage should be in force before that employee's first day.
Does a Montana sole proprietor or LLC owner need workers' comp?+
Not for themselves, unless they choose to be covered. But an owner who regularly works at customers' or contractors' sites must either elect coverage on a policy or hold an Independent Contractor Exemption Certificate from the Department of Labor & Industry.
Is Montana State Fund required, or can I use a private carrier?+
Either works. Montana employers can insure with any authorized private carrier or with Montana State Fund, which competes with private carriers and must accept any Montana employer that applies, unless the employer owes the fund on a past default.
Does my subcontractor's ICEC mean I do not cover them?+
Generally not, as long as they are working in an occupation listed on the certificate and you have no agreement that they are your employee (MCA 39-71-417). A sub without an ICEC or their own policy may be treated as your worker, and their pay can land on your policy and your audit.