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Most Maine businesses are required to carry workers’ compensation insurance, but understanding everything that is required can take some time. In this guide, we’ll cover the basics of who should receive coverage and how businesses can obtain a policy.
How does workers’ compensation help employees and employers?
Workers’ compensation might be considered a “win-win” for both employees and employers in the state of Maine. On the one hand, should an employee experience a work-related injury or occupational illness, workers’ comp can provide medical benefits and partial income replacement should they need to miss time. For employers, it can also provide peace of mind. That’s because, in most cases, it offers the company protection from legal claims that might arise if an employee gets sick or injured while working.
What are Maine’s workers’ comp requirements for employers?
Almost all businesses that have one (1) or more employees in Maine are required to have workers’ compensation insurance. The Maine Workers’ Compensation Board is responsible for ensuring compliance with workers’ comp laws in the state and serves both employees and employers.
Though most employers are required to have a workers’ comp policy, some exceptions do exist.
Exemptions
- If you are an employer that has workers in agriculture or aquaculture as seasonal or casual laborers and maintains at least $25,000 in employers’ liability insurance, with at least $5,000 in medical payments coverage, you don’t have to have a workers’ compensation policy.
- Employers of six or fewer agricultural or aquacultural laborers, if the employer maintains employers’ liability insurance of at least $100,000 multiplied by the number of full-time equivalent employees and has at least $5,000 in medical payments coverage.
Corporate
A bona fide owner of at least 20% of the outstanding voting stock of a corporation may waive in writing all the benefits provided by workers’ compensation for themselves. To do this, the owner needs to complete this waiver form and receive approval.
Members of family
The parent, spouse, or child of a sole proprietor, partner, or bona fide owner of 20% of the voting stock may waive in writing all the benefits provided by workers’ compensation. Similar to the corporate exemption, a waiver form needs to be completed and approved.
Sole proprietor
Are you a sole proprietor without employees? Having workers’ comp is not required under the Workers’ Compensation Act. A sole proprietor does not need to fill out waiver forms to be exempt from coverage.
Limited liability companies (LLCs)
There is also an exception for “owners” of limited liability companies, who do not have to fill out a waiver form. However, the parent, spouse, and/or child of a member of a limited liability company who is employed by that LLC may waive in writing all benefits provided by workers’ compensation for themselves.
Charitable, religious, educational, or other nonprofit corporations
Unless specifically included among those for whom workers’ compensation insurance has been purchased, duly elected or appointed executive officers of charitable, religious, educational, or other nonprofit corporations are not covered by workers’ compensation insurance.
Contractors and subcontractors
If you hire independent contractors, they are typically not covered by workers’ compensation. An independent contractor is a person who performs services for another under contract (and generally has several clients). Learn more in our guide to employees vs independent contractors. Another exception is if you have domestic workers in a private home.
Obtaining workers’ compensation coverage in Maine
Companies who need to purchase a policy have different options.
- Purchase workers’ compensation insurance from a licensed, private carrier. Generally, it makes sense to work with a professional who sells property and casualty insurance or who is familiar with business insurance.
- Employers who qualify can also self‐insure on either an individual or group basis. However, there can be risks to self-insuring. While this approach gives you more control over the workers’ compensation program, you’re also at more risk. That’s because a self-insured employer is responsible for all workers’ compensation losses for as long as the employee is not able to return to the job and continues to require medical treatment. Typically, self insurance is only recommended for large employers.
What to do if you’re having trouble obtaining insurance
In some cases, obtaining workers’ compensation insurance can be challenging or not possible at all. This can sometimes be true if your business is new and has no record of claims experience or if the business is one in which accidents are a frequent occurrence. If your business is having trouble obtaining worker’s compensation coverage, the Maine Employers Mutual Insurance Company (MEMIC) can be an option. Under Maine state law, MEMIC is required to provide coverage to employers that cannot obtain a policy anywhere else
Are there penalties when companies have no coverage?
Not having a policy in place can trigger some less-than-desirable outcomes: .
- Employers that do not have workers’ compensation insurance could face potential lawsuits from their employees for work‐related injuries.
- In some cases, an employer could be charged with a Class D crime, penalized up to $10,000 or 108% of the premium you would have paid for the insurance, whichever is greater.
- Additionally, there’s a risk the company could lose their business license or corporate charter.
More resources for Maine employers
Workers’ compensation is a must-have in Maine
Having a workers’ compensation policy in place makes good business sense because it helps keep your company compliant with Maine laws and provides peace of mind to your team. For employees, it ensures they’ll be covered in the event of work-related illnesses or injuries. As an employer, you can avoid legal problems arising from workplace accidents or sickness. If you have any questions about obtaining a policy, our team is here to help.
Please note all material in this article is for educational purposes only and does not constitute tax, benefits or legal advice. You should always contact a qualified tax, legal or financial professional, in your area for comprehensive tax or legal advice.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.