Short answer: Yes. In Oregon, employing even one worker makes you an employer, and almost all employers must carry workers' compensation. Some owners are exempt, including qualifying partners, owner-officers and most LLC members, along with casual labor under a small payroll threshold. Construction and landscape businesses face tighter owner limits. Penalties for going uninsured start at twice the missed premium.
Am I an employer?
The Oregon Workers' Compensation Division (WCD) answers this directly on its coverage overview: if you employ one or more workers, you're an employer. A worker is anyone you pay to do work who isn't an independent contractor. Every Oregon worker is a "subject worker" unless an exemption applies, and the WCD counts about 30 exemptions in ORS 656.027.
Worker or independent contractor?
The WCD's employer guide, Why do I need workers' compensation insurance?, puts the core question simply: if you have the right to tell someone when, where and how to do the job, that person is probably a worker. To be an independent contractor, a person must also be free from direction and control and meet other criteria, including being in an independently established business (ORS 670.600). Workers' comp, unemployment insurance and state tax law share that test.
Common exemptions
The guide highlights these:
- Partners who are real partners with the right to make business decisions.
- Corporate officers who also sit on the board and own at least 10% of the stock, or the average amount held by all stockholders.
- Most LLC members, even without substantial ownership.
- Casual labor, meaning total payroll that stays under a set amount in any 30-day period. The WCD adjusts that amount every July 1 based on Oregon's average weekly wage and publishes it in a bulletin.
Sole proprietors, partnerships, corporations and LLCs working under a contract must also qualify as independent contractors to be exempt.
Construction and landscape: stricter rules
Owners in construction and landscape contracting get less room:
- partners and LLC members need a substantial ownership interest to be exempt;
- businesses are usually limited to two exempt owners or officers, or one per 10 employees, whichever is greater, unless all owners are members of the same family; and
- Construction Contractors Board and Landscape Contractors Board rules bar hiring even casual labor while you're registered as having no workers.
Out-of-state employers
An out-of-state employer working temporarily in Oregon doesn't need an Oregon policy if its home-state policy covers the workers it brings, its home state recognizes Oregon coverage the same way, and it doesn't use Oregon subject workers while there.
How to get coverage
Oregon employers have three routes, according to the guide:
- An authorized insurer, often through the agency handling your other business insurance. SAIF Corporation, a state-owned insurer regulated like other insurers, is one option.
- Self-insurance, if WCD certifies you and you post a security deposit, among other requirements.
- A licensed worker leasing company (PEO) that provides coverage.
If no insurer will write you, the Oregon Assigned Risk Insurance Plan, administered by NCCI, assigns your account to an insurer. After you buy, make sure your insurer files proof of coverage with WCD; that's the employer's responsibility.
Penalties
WCD's penalties page lays out what happens when it finds noncompliance:
- First order: twice the premium you should have paid, with a minimum of $1,000.
- Continuing violations: up to $250 per day after the first order, with no limit on the total.
- Third order: WCD seeks a permanent court injunction; disobeying it can mean contempt sanctions, including jail.
- Claim costs: an uninsured employer pays the same benefits an insured worker would get, plus a claims-processing fee. Bankruptcy may not reduce this debt, and owners, corporate directors and officers, and LLC members and managers are personally and severally liable. Injured employees can also sue.
Scenarios
A Salem coffee shop owner hires one barista. That's one worker, so the shop is an employer and needs coverage.
A two-member landscaping LLC in Eugene with no employees, registered with the LCB as having no workers. The members may be exempt, but under board rules they can't hire casual help while registered that way.
Bottom line
One worker means coverage in Oregon, with owner exemptions that tighten for construction and landscaping. Read our workers' compensation insurance guide and workers' comp for 1099 contractors.
Contact Alishahi Insurance or call (877) 711-4545. See insurance in Oregon.
Frequently asked questions
Do I need workers' comp in Oregon with one employee?
Yes. Employing one or more workers makes you an employer, and almost all employers must carry coverage.
Are LLC members exempt from Oregon workers' comp?
Most are, but construction and landscape LLC members need substantial ownership and face limits on exempt members.
What is casual labor in Oregon workers' comp?
Labor whose total cost stays under a WCD-set amount in any 30-day period; the amount changes every July 1.
What is the penalty for no workers' comp in Oregon?
Twice the premium you should have paid, at least $1,000, then up to $250 per day, plus the cost of any claims.
Can I buy Oregon workers' comp if insurers turn me down?
Yes, through the Oregon Assigned Risk Insurance Plan administered by NCCI.
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.