Short answer: Yes. Any Montana employer with an employee, under any oral or written hiring arrangement, must elect one of three plans: self-insurance (Plan 1), a private insurer (Plan 2) or Montana State Fund (Plan 3). Full-time, part-time, seasonal and occasional workers all count. Independent contractors need an exemption certificate or their own coverage.
The rule: pick a plan
MCA §39-71-401 states that the Workers' Compensation Act applies to all employers and employees. An employer "who has any employee in service under any appointment or contract of hire, expressed or implied, oral or written, shall elect to be bound by the provisions of compensation plan No. 1, 2, or 3."
| Plan | What it is |
|---|---|
| Plan 1 | Self-insurance, with proof of solvency to the department and the Montana self-insurers guaranty fund |
| Plan 2 | A policy from a private insurance company |
| Plan 3 | Montana State Fund |
The Uninsured Employers Fund page describes Montana State Fund as a nonprofit, publicly owned carrier created by the legislature to provide a guaranteed market for all Montana employers. Self-insurance is generally limited to very large companies.
It adds that neither general liability nor health and accident insurance substitutes for workers' comp.
Exempt employment
Unless the employer elects coverage and an insurer allows it, §39-71-401(2) excludes a long list. The common ones:
- Household or domestic employment, and casual employment.
- Dependent family members and spouses who meet federal tax tests.
- Sole proprietors, working partners, and working members of a member-managed LLC.
- Real estate, securities or insurance salespeople paid solely by commission with no guaranteed minimum.
- Direct sellers as defined in federal tax law.
- Work under federal liability law, and interstate railroad work other than construction.
- Officials at amateur athletic events.
- Certain corporate officers and managers of manager-managed LLCs, including those who own 10% or more of the company, under conditions in the statute.
Independent contractors need paperwork
This is Montana's distinctive rule. The Department of Labor & Industry's ICEC page explains that under MCA §39-71-417, an independent contractor must:
- Be free from control or direction over the work, under the contract and in fact.
- Be engaged in an independently established trade, occupation, profession or business.
- And hold either an Independent Contractor Exemption Certificate (ICEC) or self-elected coverage on a Montana workers' comp policy.
Getting an ICEC takes an online application, a non-refundable $125 fee and business documents for each occupation listed. No test is required.
Contractors can be fined up to $5,000 per violation for working without an ICEC or coverage, working with a revoked or suspended certificate, transferring a certificate to someone else, or misrepresenting their status. If you hire a 1099 worker in Montana, ask for the ICEC or a certificate of insurance before the job starts.
What uninsured employers pay
The Uninsured Employers Fund (UEF) pays injured workers the benefits they would have received if their employer had been covered, then collects from the employer. The department says the employer is liable for 100% of the worker's medical and wage loss benefits and could also face a civil action by the employee.
Under MCA §39-71-504, the fund can collect:
| Charge | Amount |
|---|---|
| Penalty | Up to double the Plan 3 premium for the uninsured periods in the past three years, or $200, whichever is greater |
| Benefits | Everything the fund pays or will pay to the injured worker |
| Failure to insure after notice | An extra $200 if coverage isn't obtained within 30 days |
| Late payments | $50 per late payment |
| Interest | 12% a year on unpaid balances |
The upside of compliance
The department points to "exclusive remedy": an employer that properly carries coverage is, in most cases, protected from lawsuits for damages over work injuries.
Montana scenarios
A coffee shop with two part-time baristas. Required. Pick a plan before they start.
A member-managed LLC with two working members and no staff. Exempt, though the members can elect coverage.
Bottom line
Montana requires coverage from the first employee, and its contractor-certificate system shifts the paperwork to 1099 workers. See our workers' compensation insurance overview.
Contact Alishahi Insurance or call (877) 711-4545. Learn about insurance in Montana.
Frequently asked questions
Is workers' comp required in Montana?
Yes. Any employer with an employee must elect Plan 1 self-insurance, Plan 2 private insurance, or Plan 3 Montana State Fund.
What is a Montana ICEC?
An Independent Contractor Exemption Certificate. It shows a contractor is exempt from workers' comp, and the application fee is $125.
Do sole proprietors need workers' comp in Montana?
Not for themselves. Sole proprietors, working partners and member-managed LLC members are exempt unless they elect coverage.
What is the penalty for no workers' comp in Montana?
Up to double the Plan 3 premium for the past three years or $200, whichever is greater, plus all benefits paid to injured workers.
Is health insurance a substitute for workers' comp in Montana?
No. The department says neither health nor general liability insurance replaces a workers' comp policy.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.