A reader wrote in with this question: “I was recently injured at work and my employer never offered me workers’ comp. I’ve been out for 2 weeks with a torn right calf muscle. I cannot put weight on it. My entire time off so far is unpaid. Is this legal? I work as a dairy farmer for a small family business in Alabama that my brother-in-law owns. Thanks.”
While you might think the answer is obvious, it’s really not. Many state laws exempt certain employees from filing claims under workers’ compensation insurance. Read on to learn the complicated answer to this question below.
Can a Family Business Deny Workers’ Comp?
The two most important factors to focus on in this question are:
- The state in which this reader lives.
- His line of work.
First, know that workers’ comp laws vary by state. Most require smaller employers to carry workers’ comp insurance, but not all. That way, when situations like this arise, the injured employee has some income during recovery. And some state laws say just one employee is enough to require workers’ comp coverage. Others say a business must have at least five employees to require workers’ comp insurance. And many states specifically exempt workers who file a 1099 at tax time, such as independent contractors.
So, to our second point: Your job industry and the type of work you’re doing makes a huge difference. Farm workers are often exempt from workers’ comp insurance coverage in some states.
Does Every State Require Small Businesses to Have Workers’ Comp?
Most states require any business with at least one employee to carry workers’ comp insurance. However, as we said before, those laws can vary widely from state to state. For example: Missouri employers with five or more employees must have workers’ compensation insurance. (The lone exception is construction industry employers, which must have coverage for any and all employees.) But in California, just one employee is enough to require any business to provide coverage. And in Texas, it’s legal for any business to simply choose not to offer workers’ compensation.
There can be some caveats to this, though. Some states don’t count close family members or people who live with the business owner as employees. Others say part-time employees with irregular work schedules don’t count as employees for the purposes of workers’ comp coverage.
Knowing your state’s particular laws for workers’ comp is an important part of understanding your rights.
Which States Don’t Require Every Family Business to Have Workers’ Comp?
Currently two states do not require any family business to carry workers’ comp insurance. One of those states is Delaware. However, the other state in the one where this reader resides: Alabama.
Delaware law says all employers with at least one employee must have workers’ comp insurance. However, state law makes farm workers exempt from this coverage unless the employer chooses to offer it.
Alabama’s law is much the same. It says employers of farm workers do not have to carry workers’ comp insurance.
Since the family business this reader works for is a farm, no workers’ comp coverage is necessary under Alabama law. It’s likely completely legal for his brother-in-law to avoid paying him any workers’ compensation benefits. However, it can’t hurt to request a free workers’ compensation evaluation from a local attorney to confirm.
Which Employees Are Usually Exempt from Workers’ Compensation Coverage?
Businesses can often skirt a state’s workers’ comp laws that take effect based solely on the number of employees. That’s because every state includes a list of workers that don’t count as “employees” for workers’ comp claims.
Let’s break that down with an example. All Kansas employers must carry workers’ comp except for agricultural businesses with a gross annual payroll of $20,000 or less. So, whether an agricultural business in Kansas must carry workers’ comp coverage all depends on the following:
- How many employees work for that business.
- The amount of money that business pays each worker.
- How often and how long each employee works (i.e., seasonal, temporary, part time, or 40 hours per week).
In addition, Kansas excludes other workers from coverage. The list includes but is not limited to:
- Federal employees
- Realtors who qualify as independent contractors
- Certain owner operator vehicle drivers (i.e., Lyft and Uber drivers)
Because every state’s laws are different, it’s vital to understand how yours may apply to your own situation.
Is There Recourse If I’ve Been Denied Benefits?
While state laws don’t always require employers to carry workers’ comp insurance, a business can elect to do so by choice. In Alabama, for instance, the Department of Labor specifically says so.
It’s possible that any family business ― especially a farm ― can avoid paying workers’ comp in Alabama. But this reader still has the option of having a hard conversation with his employer. The fact that he works for a family business might make it even more difficult. But having a discussion about what’s legal vs. what’s right may open doors that were closed until now.
What other options may possibly help you if you’re in the same situation? Well, you can report any business you think is breaking the law (a workplace safety violation, for example). You can also notify your state’s agency if you feel your employer wrongly denied you benefits. These reports all go to the same agency for investigation, which varies by state.
Should I Hire An Attorney?
An experienced attorney can certainly tell you if you have a viable case. If you do, then you might be able to eventually collect benefits. Want a nearby workers’ comp lawyer to review your claim for free and advise you on your rights? We can help you with that!
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Lisa Allen is a writer and editor who lives in suburban Kansas City. She holds MFAs in Creative Nonfiction and Poetry, both from the Solstice Low-Residency Program in Creative Writing at Pine Manor College. Prior to becoming a writer, Lisa worked as a paralegal, where she specialized in real estate in and around Chicago.
