Workers comp coverage required in Michigan
Employers with 3 or more employees, or 1 employee working 35+ hours/week for 13+ weeks. Verified 2026-05-09.
Who must carry workers comp in Michigan?
Michigan workers compensation coverage is required Employers with 3 or more employees, or 1 employee working 35+ hours/week for 13+ weeks.
The threshold language matters: states write the rule slightly differently. Some count any worker, some count only W-2 employees, some count owners separately, some have industry-specific exemptions (agriculture, domestic service, casual labor). For a Michigan employer with a non-trivial workforce, the safest default is: assume coverage is required and confirm with the state department of insurance or a local agent.
How the threshold interacts with 1099s and subs
Generally considered independent contractors if they meet specific criteria, otherwise they may be reclassified as employees. General contractors can be held liable for uninsured subcontractors.
Penalty for going without
Misdemeanor, fines up to $10,000, imprisonment up to 1 year, and liability for all benefits and penalties. The financial penalty is usually a fraction of the human cost: an injured employee at an uncovered employer can sue directly under tort law instead of being limited to the workers comp benefit, exposing the owner to lost-wage damages, pain and suffering, and punitive damages without the corporate veil.
Related reading
FAQs
Who has to carry workers comp in Michigan?
Employers with 3 or more employees, or 1 employee working 35+ hours/week for 13+ weeks.
When does the requirement kick in for a new Michigan employer?
The clock starts on the first day the first qualifying employee is on the books. Michigan does not have a grace period for new employers, so a policy needs to be bound on or before the first hire date. Some agents can issue same-day binders for low-risk class codes.
What is the penalty for not having workers comp in Michigan?
Misdemeanor, fines up to $10,000, imprisonment up to 1 year, and liability for all benefits and penalties.
Do 1099 contractors trigger the coverage requirement in Michigan?
Generally considered independent contractors if they meet specific criteria, otherwise they may be reclassified as employees.
Are subcontractors counted toward the threshold in Michigan?
General contractors can be held liable for uninsured subcontractors.
What happens if I am audited and found non-compliant in Michigan?
Michigan typically issues a stop-work order, assesses back premium for the period of non-coverage, and adds penalties on top. Specifically: Misdemeanor, fines up to $10,000, imprisonment up to 1 year, and liability for all benefits and penalties. Severe or repeat violations can lead to criminal charges and personal liability for the business owner, separate from the corporate veil.