Arizona Workers Compensation Insurance-Workmans-Comp

Arizona Workers Compensation Insurance Rules

Arizona Workers Compensation

1. Who needs workman's' Compensation Insurance coverage?

1. Who needs to have Arizona workers compensation insurance?

Workers compensation insurance is for a required for a domestic servant, independent contractor, or staff whose employment is not in the customary business of the employer. However, any other workers hired for routine business require workers compensation insurance including full-time, part-time, minors, family members, or aliens.

2. Am I required to obtain Arizona workers compensation insurance if I am the sole owner of the business and have no employees?

The sole proprietor maintains the option to purchase coverage for himself/herself, however if there are no employees is not required. If there are any employees, then the sole proprietor must maintain workers compensation coverage for them. If the business operates as a corporation, you are not considered a sole proprietor unless the corporation is not considered in good standing by the Arizona Corporation Commission. A corporation is considered an employer and must obtain workers compensation coverage for its employees including shareholders who contribute to the function of the business.

3 Is a Limited Liability Company LLC or Limited Liability Partnership LLP required to obtain Arizona workers compensation insurance?

If a Limited Liability Company (LLC) or Limited Liability Partnership (LLP) has active employees that are not members, then workers compensation insurance must be obtained. Tax file election determines whether coverage is required for its employees who are members. Companies filing IRS Form 8832 taxed as a corporation, are considered a corporation must therefore hold workers compensation coverage on its member employees. If the business has not designated to be taxed as a corporation, the business will be treated as a partnership for its member employees, and will not be required to carry workers compensation. The same applies to a one member LLC as a sole proprietorship.

4. How do I determine if a worker is an independent contractor and does not require workers compensation coverage?

It is important to note that although workers compensation coverage is not required for independent contractors, disputes over an employee’s true status as an independent contractor can often occur. Courts consider these instances on an individual basis. Factors include: the length of the employment, process of compensation, the right to hire and fire, the extent of an employer’s control, and time of day of work occurs. Therefore regardless of your arrangement the court still hold the authority to deem a worker an employee and therefore will require workers compensation benefits.

5. If I’m uninsured and an employee is injured, what will happen?

If an employee is injured while working for a company that is not carrying workers compensation insurance, the employee has can file a workers compensation claim with the Industrial Commission of Arizona (ICA) or they may file a civil suit against you. Proof of the injury is required in civil lawsuit as evidence. If an employee elects to file a claim, it will then be sent to the Special Fund Division/No Insurance Section of the ICA. If the claim is approved, The Special Fund will process the claim and pay medical/compensation benefits. Reimbursement will be sought by The Special Fund from the uninsured employer for any benefits paid to the injured worker plus a penalty of 10% of the benefits rewarded or $1,000, whichever is larger as well as interest on the total.

6. What are the fines for not carrying Arizona workers compensation insurance?

An employer who has failed to provide coverage may be charged, regardless of if an employee chooses to file a workers compensation claim, a civil penalty of $1,000. A second offense within five years increases the penalty to $5,000 and $10,000 for a third instances in that same period. An employer that fails to obtain the proper coverage insurance may also be subject to an injunction by the ICA that can force the employer to cease business until the employer complies with the necessary workers compensation coverage for its employees. The offense of failure to carry workers compensation insurance is considered a Class 6 felony. A.R.S. § 23-932.

Employee Leasing and Staffing Companies

Using a PEO or Staffing company to obtain your workers compensation may be a good alternative to purchasing your own workers comp. policy. In many cases the down payment required to obtain new workers compensation insurance is high and many new businesses cannot afford the down payment. Another advantage is you will never get audited because you pay as you go for your coverage.

Insurance Source represents many different leasing companies and staffing companies and will be more than happy to price your coverage using this option. In many cases these leasing companies will offer deep discounts on your workers compensation coverage that you will not find from a standard workers compensation carrier.

USL&H & The Jones Act

We have excellent workers compensation programs for these specialty risks requiring this endorsement. If you are unsure and want to read either the USL&H or Jones Act I have provided helpful links below for you convenience. I have found them to be the most detailed and good resources on the laws.

If you need a quote that requires this coverage

Click Here for a USL&H Quote

Click here for the complete USL&H Act, courtesy of Cornell University.
Click here for: USL&H & Jones Act Information
Defense Base Act Division of Longshore and Harbor Workers' Compensation

Arizona Workers Compensation

Arizona Workers Compensation Links

Arizona Proof Of Workers Compensation Data Base

Arizona Division of Workers Compensation

Arizona Workers Compensation Forms

Employers Wokers Compensation FAQ's