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Can Owners Exclude Themselves from Workers Comp?

In most states, yes — corporate officers, LLC members, and partners can file exclusions to reduce their workers comp premium. Here’s how it works.

• ✓Owner exclusions are legal in most states for LLCs, S-Corps, and partnerships
• ✓Exclusions must be filed properly — carrier notation alone may not be enough
• ✓Excluded owners receive no workers comp benefits if injured
• ✓W-2 employees are always covered regardless of owner exclusion

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How Owner Exclusions Work

An owner exclusion removes the excluded individual from the workers comp policy as a covered person. Their income is not included in rated payroll, so the premium reflects only the employees who remain covered.

For a two-owner construction company where both owners work in the field and each earns $80,000 annually, excluding both removes $160,000 from rated payroll. At a $5.00 class code rate, that’s $8,000 in annual premium savings.

The exclusion is recorded by an endorsement to the policy. In most states, the carrier handles this. In some states — notably Florida for construction — the owner must also file a formal exemption with the state workers comp board. Both filings are required for the exclusion to be valid.

State-Specific Rules for Owner Exclusions

Most states allow 2–3 officers or members to exclude per policy. Unlimited exclusions are typically only available for sole proprietors. In Florida’s construction industry, up to three officers of a corporation or three members of an LLC can hold active exemptions at one time.

California is one of the stricter states — corporate officer exclusions are allowed but must be documented carefully, and the officer must own at least 15% of the stock. Workers in supervisory or officer roles who don’t meet ownership thresholds cannot exclude.

The safe approach is to confirm your state’s specific exclusion rules with your agent, get the carrier endorsement, and file with the state board where required. If the exclusion is challenged after an injury, you want documentation that every step was properly completed.

You Might Also Find Helpful

• Workers Comp for LLCs, S-Corps, and Partnerships
• Sole Proprietor Workers Comp Coverage
• Ghost Workers Comp Policies for 1099 Contractors
• Workers Comp Exemptions by State

Structure Your Policy to Exclude What You Should

We’ll confirm your state’s exclusion rules and set up your policy correctly from day one — no overpaying, no compliance surprises.