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Maryland Small Business Workers' Compensation Requirements

Workers' compensation insurance is a state-mandated insurance requirement for most employers, in almost every state. In Maryland, virtually all businesses with one or more employees are required by law to have workers' compensation insurance, except those able to self-insure. However, a sole proprietor or a partner in a partnership is generally not considered an employee, although either may elect to be covered by workers' compensation insurance if they devote full time to the business.

An employee who is an officer of a corporation or a person who is a member of an LLC is generally required to be covered for workers' compensation purposes if he or she provides a service for the business for monetary compensation. However, such persons may elect out of coverage in the case of officers in certain "close corporations," officers who are 20% or greater stockholders in certain farm corporations and professional corporations, or members of an LLC who own a 20% or greater interest in the LLC.

Workers' compensation provides wage loss and medical benefits to employees injured on the job and it protects you, as an employer, from legal action for damages for injuries or job-related illnesses suffered by your employees. In effect, it is a "no-fault" insurance system for work-related injuries or illnesses. Thus, if you fail to obtain required workers' compensation insurance, and an employee is injured on the job, you will have opened yourself to unlimited liability and severe legal consequences, so it is very important to obtain workers' compensation insurance for your employees. You can also incur serious fines for doing business without required workers' compensation insurance.

Employers in Maryland may obtain workers' compensation coverage either from private insurers or from the Injured Workers Compensation Fund. Be aware that neither general liability nor health and accident insurance can properly substitute for workers' compensation insurance.




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The Kramer Law Firm LLC represents small business clients throughout Washington, D.C. and Montgomery and Prince George's Counties in Maryland, including the communities of Bethesda, Bowie, Chevy Chase, Gaithersburg, Germantown, Laurel, Potomac, Rockville and Silver Spring and all of the surrounding areas.

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