Short answer: Yes, for most employers. Wisconsin requires worker's compensation on the day you employ a third person, or once you pay $500 or more in gross wages in any calendar quarter, by the 10th day of the following quarter. Farmers are covered at six workers on 20 days. Owners without employees are generally exempt.
Two triggers, and either one counts
The Wisconsin Department of Workforce Development (DWD) lists the tests. You must have coverage if your business:
| Trigger | When coverage must start |
|---|---|
| Employs 3 or more full-time or part-time employees | The day you employ the third person |
| Pays $500+ in combined gross wages in any calendar quarter for work in Wisconsin | By the 10th day of the first month of the next quarter |
| Farm that employs 6+ workers on the same day for any 20 days in a calendar year | By the 10th day after the 20th day of employment |
A shop with one part-time helper can reach $500 within a quarter, so the three-employee figure is only half the rule. The underlying statute is Wis. Stat. §102.04.
Out-of-state employers
If you have employees working in Wisconsin, DWD says you need a policy from an insurer licensed in Wisconsin, with Wisconsin named as a covered state in Section 3A of the policy. A home-state policy without that endorsement isn't enough.
Owners: who's in and who's out
According to DWD's guidance on sole proprietors, partners and LLC members:
- a sole proprietor with no employees doesn't need a policy;
- a partnership with partners only, or an LLC with members only, doesn't need one either;
- policies exclude these owners unless specifically endorsed to include them, and they can add themselves by paying the extra premium.
Corporations are treated differently. DWD's corporate officer page says officers are employees. A closely held corporation (10 or fewer stockholders) with no more than two officers and no other employees can skip a policy only if both officers file a Corporate Officer Option Notice. Officers who opt out still count toward the employee total.
Independent contractor or employee?
Wisconsin applies a nine-part test under s. 102.07(8). DWD stresses that a worker isn't a contractor just because both sides say so, or because another agency treats them that way. The person must, among other things, keep a separate business, hold an FEIN or have filed business tax returns, work under specific contracts, carry their own operating expenses, and face real profit or loss. Missing any one of the nine conditions makes the worker an employee for comp purposes.
Where to buy
DWD's buying guide states plainly that the State of Wisconsin doesn't write or sell worker's compensation. You buy it from a private insurer through an agent. If no insurer will accept you, your agent can apply to the Wisconsin Compensation Rating Bureau, which administers the Wisconsin Worker's Compensation Pool. Some employers qualify to self-insure instead.
Penalties
DWD lists a penalty of twice the premium that should have been paid during the uninsured period, or $750, whichever is greater. An employer with a lapse in coverage can face $100 for each uninsured day, for up to 7 days. Injured employees of uninsured employers may still receive benefits through the Uninsured Employers Fund, and the employer can be held responsible for repaying them.
DWD also states that withholding money from wages to pay for comp premiums is illegal.
Scenarios
A bakery with two part-time workers paying $3,000 in wages per quarter. The $500 test is met. Coverage is required, even with only two employees.
An LLC with two members and no staff. No policy is required. The members may buy coverage for themselves.
A two-officer corporation hires its first employee. The officer option no longer applies; a policy is required.
An Illinois contractor sends a crew to Kenosha. The policy needs Wisconsin listed in Section 3A.
Bottom line
In Wisconsin, a single employee can trigger the requirement through the $500 quarterly wage rule. Check both tests, file officer notices correctly, and line up coverage before you need it. Read our workers' compensation insurance overview.
Contact Alishahi Insurance or call (877) 711-4545. See insurance in Wisconsin.
Frequently asked questions
How many employees before workers' comp is required in Wisconsin?
Three, on the day you hire the third. But one employee can trigger it if you pay $500 or more in wages in a calendar quarter.
Do sole proprietors need workers' comp in Wisconsin?
Not if they have no employees. They can buy coverage for themselves voluntarily.
Can corporate officers opt out in Wisconsin?
A closely held corporation with no more than two officers and no other employees can file a Corporate Officer Option Notice.
What is the penalty for not having workers' comp in Wisconsin?
Twice the unpaid premium or $750, whichever is greater, per DWD.
Does the State of Wisconsin sell workers' comp?
No. Coverage comes from private insurers, or the WCRB pool if the private market turns you down.
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.