Missouri Workers’ Compensation: I’m a Small Business, Why Should I Care?


Workers’ Compensation.  Just the phrase causes many to conjure up images of employees faking injury to secure monetary reward.  Employers cringe when they hear “workers’ compensation” or an “on the job injury”.

However, it may come to a shock that many small businesses are unaware of the laws that are meant to protect not only employees in the state of Missouri but employers as well.  In many, many instances, an employer is much better served operating under the workers’ compensation system.  One could write a novel on the do’s and don’ts of workers’ compensation cases, both from the perspective of the injured employee as well as from the perspective of the covered employer.  In an effort to streamline a tedious subject, following is a summary of what small businesses should know about Missouri workers’ compensation and why they should care it exists.

What employers/businesses must obtain workers’ compensation coverage?

Missouri’s Workers’ Compensation Law is contained in Chapter 287 of the Revised Statutes of Missouri.  It provides that any employer with five or more employees AND all employers in the construction industry MUST provide protection for the employees.  This protection is provided by purchasing workers’ compensation insurance from an authorized insurance company or by becoming qualified to be self-insured.

What do you mean by “construction industry”?

Construction industry employers include entities that erect, alter, demolish or repair improvements.  Think carpenters, plumbers, electricians, painters, drywallers, landscapers, welders, concrete workers and roofers as some of the individuals operating in the construction industry.  No matter how few employees you have in these industries, you must provide protection.

Who isn’t covered under the Missouri Workers’ Compensation Act?

Sole proprietors and partners are excluded under the statute unless they elect to be included.  LLC members and corporate officers are considered employees generally.

My business is an LLC, who is considered an employee?

LLC members and corporate officers are considered employees in Missouri.  However, LLC members can exclude themselves from coverage.  In order to effectuate this, each LLC member must complete one of the LLC Rejection of Coverage forms.

I am a general contractor, do I have to cover my subcontractors?

Yes, a general contractor is liable for injuries to uninsured subcontractors or their employees.  However, a general contractor can and should require that its subcontractors carry insurance.

I have a small family owned business, who counts toward the 5 employee requirement?

A member of the employer’s family within the third degree of affinity or consanguinity is included in the magic number except for family owned farm corporations.

I have a number of volunteers at my business, are they covered?

Missouri workers’ compensation law does not apply to volunteers of tax exempt organizations operating under Section 501(c)(3) of the Internal Revenue Code as long as they are not paid wages, and the services are provided purely on a charitable and voluntary basis.

If my business doesn’t have 5 or more qualified employees, why should I think about obtaining workers’ compensation coverage?

If your business does not have the required number of employees or isn’t in the construction industry to come under the law, you may still elect to obtain coverage.  Simply because you aren’t forced to operate under the workers’ compensation system doesn’t mean you don’t want to be in the system.  If an employer, no matter how big or how small, fails to provide qualified protection through insurance or by being self-insured, it risks being sued in civil court for damages.

There is no magic answer as to whether small businesses should seek coverage.  One should look at the nature of their business to determine if the risk of being sued civilly outweighs the benefit of being in a limited system of workers’ compensation.  Everyone runs the risk of negligence in the workplace.  If negligence results in injury to an employee, an employer could be looking at a suit in civil court for damages if they do not carry workers’ compensation insurance.  Generally speaking, this could result in damages that far outweigh exposure in the workers’ compensation arena.

Again, just a quick overview of the laws surrounding Missouri workers’ compensation and how it applies to small businesses.  Remember, no matter how small your business is, it is important to consider whether coverage is right for you.


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