Does my South Carolina business need workers’ comp?
If you’re just starting a South Carolina business — or if you’re about to hire a few more employees — you likely have some questions about workers’ comp coverage. First, an obvious one: Do you even need workers’ comp?
The answer is...maybe. It really depends on how many employees you have and—to a lesser degree—what kind of business you run.
What does South Carolina law say about workers’ comp?
First off, the official rule is that all South Carolina employers who employ at least four people (full time or part time) need to purchase workers’ comp coverage. Employers get covered by paying premiums to an insurance company that will pay benefits in the event of an illness or injury (see what workers' comp covers in South Carolina here).
(Employees don’t pay anything for their workers’ comp coverage, by the way. Paying for coverage is completely the responsibility of the employer.)
Those are the basics. Now, let’s look at a few specific situations.
Do I need workers’ comp for independent contractors?
Generally, you don’t need to purchase workers’ comp for independent contractors—as long as their employment is casual and you’re not hiring them to do things that a regular employee would normally do. For example, if you hire an independent contractor to trim the shrubs outside your office every month, you likely don’t need to purchase workers’ comp for that person.
There are exceptions, though. Sometimes there are disputes about whether a worker should really be considered an independent contractor. If there’s a difference of opinion, South Carolina authorities may consider a number of different factors, such as how long the worker was employed at your business, who supplied the tools, who set the hours of work, and whether the work performed by the contractor was part of your core business offering.
Basically, whether or not you pay your worker with a 1099 isn’t the only thing that matters in workers’ comp law. And if you hire an independent contractor for regular hours every week—and they do work which is vital to your business operation—you should consider covering that person with workers’ comp. If they ever get injured on the job, they’ll have a strong case that they should have been covered by your insurance like a regular employee.
It’s better to be on the safe side: get workers’ comp for any independent contractors who do a significant amount of work for your business.
I’m a sole proprietor in South Carolina and don’t have any employees. Do I need workers’ comp?
No, you don’t! If you haven’t hired anyone, you’re not required to get workers’ comp.
I have a South Carolina LLC. Do I need workers’ comp?
Do you have at least four employees and an annual payroll of $3,000 or more? Then, yes. You do.
Do South Carolina corporations need to purchase workers’ comp coverage?
Absolutely. By South Carolina law, a corporation is considered an employer. If you’re in charge of insurance and legal compliance for a corporation, you need to make sure you have an active workers’ comp policy for all employees. (Go here to read about the rules for excluding owners and officers on your South Carolina workers' comp policy.)
Are there any workers’ comp exceptions?
Yes, actually. In certain circumstances, you don’t need to insure casual employees, agricultural employees, or real estate agents. You also won’t need to purchase workers’ comp if your annual payroll is less than $3,000. For complete information on who is excepted, see section 42-1-360 of South Carolina state law. (Or, just ask your insurer. It’ll be easier.)
Okay, now that you've figured out whether you need workers' comp, check out The Employer’s Guide to South Carolina Workers’ Comp Insurance.