Short answer: Yes. The Utah Labor Commission says that, with few exceptions, all employers must provide workers' compensation coverage for their employees. Owners with no employees can apply for a coverage waiver, and some small corporations can exclude their directors and officers. Employers who go without coverage face penalties of at least $1,000 and can lose lawsuit protection.
The general rule
The Labor Commission's Industrial Accidents Division administers the Utah Workers' Compensation Act. It describes a system that, since 1917, has provided medical care and disability payments for injured workers and immunity from personal injury lawsuits for employers. Its summary of who's covered is short: "With few exceptions, all employers must provide workers' compensation coverage for their employees."
The Commission's employer page describes the system as no-fault insurance that provides medical and disability benefits.
Who can waive coverage: the WCCW
Utah treats some people with no employees who hire out their services as "statutory employees" of the business that hires them. Those individuals can waive their right to coverage with a Workers' Compensation Coverage Waiver (WCCW). The Commission says these categories may be eligible:
- sole proprietorships with no employee other than the owner;
- partnerships with no employees other than the partners;
- LLC members, since LLCs are treated as partnerships; and
- independent contractors in those categories with no employees.
Utah Code §34A-2-103(2)(b) defines an independent contractor as someone who is independent of the employer in executing the work, not subject to its routine rule or control, engaged only in a definite job, and subordinate only in achieving a result to the employer's design.
Applying for a waiver
The application requires supporting documents and a nonrefundable $50 processing fee. Applicants show business legitimacy through combinations of items such as:
- a valid city or county business license, or an occupational license;
- an active liability insurance policy;
- a prior-year tax return showing business income;
- a business bank account; and
- proof of a business phone, physical location or advertising.
Truck owner-operators driving under an independent contractor agreement must also show occupational accident insurance meeting Utah Code §34A-2-104. A waiver runs for one year, and the Commission can investigate, deny or revoke a waiver if the business is or becomes ineligible.
The corporate director and officer exclusion
Senate Bill 45 (2013) lets a registered Utah corporation with no employees other than its directors and officers file a notice to exclude them, for up to five directors and officers. Corporations that contract out their work, such as construction contractors, can't use this exclusion and should apply for a WCCW instead. If the corporation already has a policy, the exclusion is reported as an endorsement.
How to provide coverage
- Insurance. Buy a workers' compensation policy from an insurer.
- Self-insurance. The Commission notes employers may qualify to pay benefits directly to injured employees without a policy.
- Extra-territorial coverage. Utah employers sending employees out of state can look into extra-territorial certificates.
Penalties
The Industrial Accidents Division monitors employers statewide and investigates suspected noncompliance. Consequences include:
- penalties of at least $1,000;
- injunctions prohibiting continued business operations; and
- loss of the "exclusive remedy," meaning injured workers can sue the employer and its employees for damages.
Separately, under Utah Code §34A-2-114, an employer that unlawfully impedes or diminishes an employee's claim for benefits faces fines of up to $5,000.
Scenarios
A Salt Lake City cleaning company with three part-time employees. It's an employer, so it needs coverage.
A solo electrician in Ogden who subcontracts to general contractors. Without employees, he may qualify for a WCCW, which documents that he has waived coverage.
A two-officer software corporation in Lehi with no other staff. It may file the director and officer exclusion. Once it hires an employee, that employee must be covered.
A one-truck owner-operator leased to a carrier. A waiver also requires proof of occupational accident insurance.
Bottom line
In Utah, the default is coverage for every employee. Waivers and exclusions exist for owners without employees, but they require paperwork and annual renewal. See our workers' compensation insurance guide and workers' comp for 1099 contractors.
Contact Alishahi Insurance or call (877) 711-4545. See insurance in Utah.
Frequently asked questions
Is workers' comp mandatory in Utah?
Yes. With few exceptions, all Utah employers must provide workers' compensation coverage for their employees.
What is a Workers' Compensation Coverage Waiver in Utah?
A waiver that lets sole proprietors, partners, LLC members and independent contractors with no employees waive coverage. It costs a nonrefundable $50 fee.
Can Utah corporate officers opt out of workers' comp?
Corporations with no employees except up to five directors and officers can file an exclusion, unless they contract out their work.
What is the penalty for not having workers' comp in Utah?
Penalties of at least $1,000, possible injunctions, and loss of the exclusive remedy protection.
How long is a Utah coverage waiver valid?
One year. The Labor Commission can revoke it if the business becomes ineligible.
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.