Are Small Businesses Required to Have Workers’ Compensation Coverage?


Posted by: Chris

Employers in Oklahoma are legally required to obtain workers’ compensation insurance. In fact, employers can face serious penalties for failing to fulfill this legal obligation, including fines of up to $10,000. But, there are some exceptions to this rule. 

The law does not require certain types of businesses to provide this coverage to their employees. Are small businesses required to have workers’ compensation coverage? Over 700,000 people are employed by small businesses in this state, so it’s important for these workers to understand whether or not they are covered by the workers’ compensation system. Here’s what you should know:

The Small Family Business Exception

The law makes an exception for certain family-owned small businesses that operate in the state of Oklahoma. Small business owners with five or fewer employees are not required to have workers’ compensation insurance. But, this exception only applies if the employer is related by blood or marriage to each of the employees.

For example, let’s say a man owns a small business and employees his two adult children and their spouses. The owner would not need to obtain workers’ compensation insurance since he employs fewer than five people and all of his employees are related to him by blood or marriage.

Small Businesses and Independent Contractors

Some small businesses are required to have workers’ compensation insurance, but are not legally obligated to provide coverage to every worker. 

For instance, independent contractors are not covered by the workers’ compensation system in Oklahoma. If a small business owner hires an independent contractor, he is not required to provide workers’ compensation coverage to him even if he is required to provide it to his other workers. This is because independent contractors are not considered employees, so they are not entitled to the same benefits.

Sole Proprietorships

According to the U.S. Small Business Administration, most small businesses in Oklahoma are sole proprietorships. If you are a sole proprietor operating in Oklahoma, you are not legally required to obtain workers’ compensation insurance. However, sole proprietors can choose to purchase coverage if they would like to be protected in the event of an on-the-job injury.

There are several exceptions, but many small businesses are required to purchase workers’ compensation coverage for their employees. If you work at a small business, it’s in your best interest to find out whether or not your employer has coverage so you are prepared following a workplace injury.

Have you been injured at work? If so, the knowledgeable attorneys at Armstrong & Vaught, P.L.C. can help. Our experienced team will work tirelessly to protect your rights and secure the workers’ compensation benefits you deserve. Call us now at 918-582-2500, toll free at (800) 722-8880, or contact us online for a free consultation with a skilled attorney.