Do I need workers' comp if I have no employees? (And why your customer wants a WC certificate)

You're a solo contractor — or you use subs who have no employees — and a client just demanded a workers' compensation certificate of insurance. If you're thinking "but I have no employees, why would I need workers' comp?", you're asking the right question. Here's the real answer.

The short version

Two different things are going on, and people conflate them:

• The law: In most states, a true solo owner with no employees can be exempt from carrying workers' comp (rules vary by state — some let you file an exemption/waiver, a few are moving to require it regardless).
• The contract: Your customer can require it anyway — and for any sizable job, they usually will. Being legally exempt doesn't get you out of a contractual requirement.

Why customers insist on it (the audit mechanic)

This is the part that surprises people. When a general contractor or business hires you as a subcontractor and you don't provide a workers' comp certificate, here's what happens: at the GC's annual insurance audit, their workers' comp carrier treats your payments as if you were their employee and charges them premium on your hours. So an "uninsured" sub literally costs the GC money. That's why so many will tell you: no WC certificate, no work.

The second reason is liability. If someone gets hurt on the job and there's no workers' comp in the chain, the injured party can come after the GC — and even the property owner. Customers require the certificate to push that risk back where it belongs.

Your options

1. Buy a workers' comp policy. For a solo operator it's often cheaper than people expect, and you can usually get one quickly through your agent. Some contractors buy a short-term or "ghost" policy for the duration of a specific project and cancel after. (A ghost policy covers the business owner's exposure without active employees — ask your agent.)
2. File a state exemption / waiver. Many states let a sole proprietor file a certificate of exemption. Important caveat: an exemption certificate often is not enough to satisfy a customer's pre-qualification — some will still want an actual policy or your subs' certificates.
3. Show your subs' coverage. If you sub work out, the customer may want certificates from your subcontractors too (see below).

The flip side: if YOU hire subs, this lands on you too

Here's what catches the contractor who's also hiring out part of a job: the exact audit mechanic above now points at you. If your excavator, your laborers, or any sub doesn't carry workers' comp, your WC policy gets charged for them at your audit — and you carry the liability if they're hurt. So you need to collect and verify a certificate of insurance from every sub before they start, and confirm it's active through the job.

That means checking, for each sub: workers' comp is present (or a valid exemption), general liability limits meet the contract, the policy hasn't expired, and — if your contract requires it — additional-insured and waiver-of-subrogation endorsements are actually on the policy. Our free Subcontractor COI Verification Checklist walks through all of it, and the free COI Checker grades a certificate against standard requirements in seconds.

This article is general information, not insurance or legal advice. Workers' comp rules vary by state and change over time; confirm your specific requirements with a licensed insurance agent or your state authority.