Does South Carolina require workers’ compensation insurance?
Yes, once a South Carolina business regularly employs four or more people. The Workers' Compensation Commission counts part-time workers and family members toward the four. A business with fewer than four employees, or under $3,000 of payroll in the previous calendar year, is outside the Act under S.C. Code 42-1-360. The Commission issues no exemption certificate, and a contractor can be liable for an uninsured subcontractor's workers.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
How many employees before South Carolina requires workers' comp?
South Carolina requires workers' compensation from a business that regularly employs four or more people in the same business within the state. Under S.C. Code 42-1-360, a business with fewer than four employees, or with a total payroll under $3,000 in the previous calendar year regardless of head count, is not subject to the Act. The Workers' Compensation Commission counts part-time workers and family members toward the four.
Fewer than four employees does not settle it on a job site. Under S.C. Code 42-1-400 through 42-1-415, a contractor answers for the injured workers of an uninsured subcontractor, regardless of how many employees that subcontractor has, which is why general contractors ask small subs for a certificate. Paying workers on a 1099 does not decide the question either; the Commission looks at control, equipment, method of payment, and the right to fire.
Source: S.C. Code 42-1-360, checked .
Which owners, officers, and family members are exempt in South Carolina?
Sole proprietors and partners are not covered by default. Each can elect coverage under the business's policy if actively engaged in the business and the insurer is notified (S.C. Code 42-1-130). A corporate officer can reject coverage under 42-1-520. Section 42-1-360 also leaves out casual employees, agricultural employees unless the employer opts in, railroads, federal employees, some commission-only real estate agents, and owner-operator truck drivers under an independent contractor contract.
The Act does not name LLC members. How the owners of an LLC are treated for coverage is a question to settle with the carrier writing the policy, and with the Commission's Coverage Division if the answer is unclear.
Source: S.C. Code 42-1-130, checked .
What happens to a South Carolina employer with no workers' comp?
Under S.C. Code 42-5-40, an employer that refuses or neglects to secure coverage owes a fine of $1 per employee for each day, never less than $10 or more than $100 a day. While uninsured, the employer can also be sued directly by an injured worker and loses defenses the Act would otherwise allow. Willful refusal is a misdemeanor under 42-5-45: a fine of $100 to $1,000, 30 days to six months in jail, or both.
Source: S.C. Code 42-5-40, checked .
Who enforces workers' comp in South Carolina?
The South Carolina Workers' Compensation Commission administers the Act. Its Compliance Division investigates claims filed with no apparent insurance, decides whether the employer is insured or subject to the Act, and prosecutes employers who fail to carry coverage. Its Coverage Division keeps the historical record of each employer's coverage, searchable online.
Source: SC Workers' Compensation Commission, Compliance Division, checked .
Where do South Carolina employers buy coverage?
South Carolina is a private-market state. Employers buy from a commercial carrier licensed to write workers' compensation in South Carolina or, when no carrier will write them, through the assigned risk program NCCI administers. Larger employers can apply to self-insure. The State Accident Fund insures state government and the counties and municipalities that choose it, not private businesses (S.C. Code 42-7-10 to 42-7-50).
Source: SC Workers' Compensation Commission, Employer FAQs, checked .
Who sets the class codes and rates in South Carolina?
South Carolina is an NCCI state. The National Council on Compensation Insurance files South Carolina's advisory loss costs and publishes a yearly South Carolina State Advisory Report on that filing, and class codes and experience mods follow NCCI's rules. NCCI also administers the state's assigned risk program.
Source: NCCI, State Advisory Resources: South Carolina, checked .
Is there an exemption or waiver form in South Carolina?
No. The Commission says it does not certify that employers are not subject to the Act, so a small South Carolina business has no exemption certificate or waiver to hand a contractor. The forms that exist are narrower: Form 5, the Corporate Officer Notice to Reject, and Form 38, the Employer's Withdrawal of Election to Adopt the South Carolina Workers' Compensation Act.
Form 5 is signed by the officer before a notary and filed with the insurance carrier, not with the Commission. Form 38 goes to the Commission and, under S.C. Code 42-1-390, takes effect 60 days after the Commission receives it.
Source: SC Workers' Compensation Commission, Employer FAQs, checked .
Sorting out South Carolina workers' comp for your business
Tell Redoubt what the business does, who works in it, and what the South Carolina 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 South Carolina pages that go deeper
South Carolina workers’ comp FAQ
Do I need workers' comp in South Carolina with three employees?+
Not by law, as long as you regularly employ fewer than four people in South Carolina. Part-time workers and family members count, so a business with two full-time employees, one part-timer, and a working relative is at four. A general contractor may still require a policy before you start a job.
Can I get a workers' comp exemption certificate in South Carolina?+
No. The Workers' Compensation Commission does not certify that an employer is not subject to the Act. When a contractor asks for proof, what satisfies it is the contractor's call; a small policy of your own is the common answer.
I bought a policy with fewer than four employees. Can I just cancel it?+
Cancelling the policy is not enough. The Commission treats a previously exempt employer who voluntarily buys coverage as subject to the Act until it files Form 38 withdrawing that election, and Form 38 takes effect 60 days after the Commission receives it.
How does a South Carolina corporate officer opt out?+
By signing Form 5, the Corporate Officer Notice to Reject, before a notary and filing it with the business's insurance carrier. An officer who rejects coverage gives up workers' comp benefits and would have to sue the employer at common law after an injury, under S.C. Code 42-1-520.
How do I check whether a South Carolina business has workers' comp?+
Use the Commission's online Verify Coverage search, which looks up coverage by employer and date. It does not show employers covered through the State Accident Fund, and the Commission says it does not certify that the database is accurate and current.