With limited exceptions, every employer in the Commonwealth with one or more employee(s) is required by law to have a valid workers' compensation policy at all times. This "no fault" insurance not only provides injured workers with medical care and partial wage replacement, but also protects the policyholders from potentially damaging lawsuits. Although most companies in Massachusetts purchase a traditional commercial insurance policy, there are alternative methods of coverage which include licensing as a self insurer, gaining membership in a self insurance group, or obtaining coverage in the Assigned Risk Pool.

What are the Limited Exceptions to the Coverage Requirements?

Under specific conditions outlined in Chapter 152, section 1(4), the following are not considered employees and therefore not required to be covered by workers' compensation insurance: professional athletes, real estate agents, seamen, taxicab drivers, door-to-door salespeople, and part-time domestic workers that work less than 16 hours per week for one employer.

LLCs, LLPs, Partners and Sole Proprietors - Members of a Limited Liability Company (LLC), partners of a Limited Liability Partnership (LLP), and partnerships or sole proprietors of an unincorporated business are not required to carry workers' compensation insurance for themselves. However, under a change to the law in 2002, such members, partners and sole proprietors may now choose to purchase workers' compensation insurance coverage for themselves. To obtain coverage, the member or partner should contact an insurance broker and state that they wish to obtain a policy. Please be advised that optional coverage applies only to such members, partners or sole proprietors. Any employee of such an entity, who is not a member or partner in the business, must be covered by workers' compensation insurance.

Corporate Officers - In 2002, a bill allowing certain corporate officers to request exemption from coverage under the Workers' Compensation Act was enacted into law. Any corporate officer who owns at least 25% interest in the corporation may exercise their right to exempt themselves from the provisions of the Workers' Compensation Act. Such an exemption does not apply to employees of a corporation who are not corporate officers; employees must be covered by a valid workers' compensation policy at all times. In order for corporate officers to exercise this right of exemption, all eligible corporate officers must sign the Affidavit of Exemption for Certain Corporate Officers or Directors - Form 153, stating whether or not they wish to exempt themselves. The exemption must be filed with the DIA's Office of Investigations in Boston for approval.

Independent Contractors - Independent Contractors are not considered employees and therefore are not required to be covered by workers' compensation insurance. However, employers in Massachusetts must be very careful to ensure that legitimate employees are not improperly classified as independent contractors. In July of 2004, Massachusetts passed the Independent Contractor Law narrowed the standard for determining independent contractor status. Specifically, the Massachusetts law created a presumption that a work arrangement is an employer-employee relationship unless the party receiving the services can overcome three rigid legal presumptions of employment: First, the worker must be free from the presumed employer's control and direction in performing the service, both under a contract and in fact. Second, the service provided by the worker must be outside the employer's usual course of business. Finally, the worker must be customarily engaged in an independent trade, occupation, profession or business of the same nature as that involved in the service performed.