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A sole proprietor is not required by the state of Michigan to carry workers compensation insurance unless they are paying at least one full-time or three part-time employees to do their job. These employees can be paid either via W2 or 1099 to be covered.
If you have any employees or use subcontractors, a workers compensation policy is required for your business. b. Sole proprietors only require a workers compensation policy when they have 1 full time or 3 part-time employees.
Workers comp penalties vary by state The penalty for not having workers compensation insurance in California is very similar, but can reach up to $100,000 in fines.
Corporations, limited liability companies and partnerships must either have a workers compensation policy or a Notice of Exclusion Form, WC-337, on file with this office. The owner(s) are considered an employee(s) of the business.
When do sole proprietors need workers compensation insurance? A sole proprietorship with no employees typically is not required to carry workers compensation insurance. However, some states, such as California, will require specific types of contractors to carry this policy, even if they dont employ anyone else.
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An employer who fails to obtain workers comp insurance is guilty of a misdemeanor and may be fined not more than $1,000.00, or imprisoned for not more than 6 months, or both. Each days failure is a separate offense.
There are limited exceptions under Michigan law including: Employers that have not employed at least 1 person for at least 13 weeks. Agricultural employers that employ less than 3 people. Households that do not employ domestic workers more than 35 per week.

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