When a New York owner can stay off the policy

The default rule leaves owners off the policy

A sole proprietor, a partner, an LLC member and an LLP member are not employees for the purpose of obtaining workers' compensation insurance in New York. The law does not force them onto their own policy.

Coverage is required once the business has employees, but the owners themselves still do not count. Partners and members are excluded from coverage once there are employees, and they may elect to be included.

That election has a form. The Notice of Election, form C-105.3, brings partners, members or self-employed persons under the coverage of a policy, under Section 54, subdivision 8, of the law, effective as of the date filed with the insurance carrier.

Being off the policy means being uncovered. An owner hurt on a job has no claim under their own policy unless they elected in, and a general contractor's requirements usually decide it first, as the electricians page shows.

Partners and LLC and LLP members are not considered employees for the purpose of obtaining workers' compensation insurance, but may voluntarily cover themselves under a workers' compensation policy. — New York State Workers' Compensation Board, retrieved 2026-09-29

form C-105.3Form C-105.3, under WCL Section 54 subdivision 8, elects partners, members or self-employed persons onto a policy, effective when filed with the carrier. — New York State Workers' Compensation Board, retrieved 2026-09-29

Why the LLC member rule matters so much

New York treats LLC members like partners, not like corporate officers. A two-member LLC with no employees needs no policy, and both members are off any policy the LLC later buys.

That differs from many states, where LLC members can be excluded only under percentage-ownership tests. New York's rule is structural: member, not employee.

It also cuts both ways. Off the policy means no wage-loss or medical coverage if you are injured in the business's own work, and no certificate listing you as covered when a client asks.

The structure decision comes before the coverage decision. Filing the LLC yourself through New York Business Express or having a formation service file it changes nothing about the member rule, so choose the structure for liability and tax reasons, then handle coverage deliberately.

Under Section 54 of the Workers' Compensation Law, members of an LLC or LLP are treated the same as partners of a business for workers' compensation coverage purposes. — New York State Workers' Compensation Board, retrieved 2026-09-29

Corporate officers are employees, not exempt owners

A corporation is different. Officers are employees, so the member-and-partner exclusion never applies to them.

The only corporate exemption is the tight one: a one or two person owned corporation, those owners owning all the stock and holding all offices, with no other employees, day labor, leased, borrowed or part-time employees, other stockholders, unpaid volunteers including family members, or subcontractors.

Beyond that, officers and any employees must be covered. A corporation with three officers and no crew still needs a policy covering all three.

Check the practical effect at the certificate stage: an officer's coverage shows on the C-105.2 by default, a member's only when elected in. Clients who read certificates notice.

Coverage is not required for a one or two person owned corporation whose owners hold all the stock and all offices, with no other workers of any kind. — New York State Workers' Compensation Board, retrieved 2026-09-29

Coverage is required if the corporation has more than two officers or shareholders, or where the officers do not own all the shares. — New York State Workers' Compensation Board, retrieved 2026-09-29

The construction catch that overrides the exemption

The exemption survives on paper for a construction sole proprietor, partner or small corporation with no employees. In practice it mostly does not survive the first general contractor.

The Board describes the mechanism plainly. Individuals alleged to be subcontractors have been determined by the Board, in its adjudicatory capacity, to be employees when injured, with claims against the general contractor.

As a result, carriers often assess general contractors premiums for all subcontractors on the job site unless the subs furnish proof of their own policies. So general contractors routinely require subs to provide proof of their own coverage to co-work on the job.

The Board states the outcome directly: sole proprietors, partnerships and one or two person owned corporations with no employees, not otherwise legally required to buy a policy, end up purchasing one, and including themselves in it, to work for a particular general contractor.

The Board states general contractors routinely demand proof of coverage, so many employee-free sole proprietors and small corporations buy policies including themselves to work for one. — New York State Workers' Compensation Board, retrieved 2026-09-29

In many instances, individuals alleged to be subcontractors have been determined by the Board, acting in its adjudicatory capacity, to be employees when such individuals have been injured and have filed claims against the general contractor.

Employees cannot waive what owners can

The exemption belongs to owners only. Section 32 of the law states that no agreement by an employee to waive their right to workers' compensation benefits is valid unless it relates to a specific claim and has been approved by the Board.

A signed release from a new hire is worth nothing. It is also illegal to make the employee pay for the coverage: Section 31 makes it a misdemeanor for an employer to deduct the cost of coverage from wages.

So the money flows one way. The owner decides whether the owner is on the policy. The employees are on it the day they start, and no paper changes that.

If someone is arguing contractor status instead, that is a different argument with a different test. The subcontractors page covers it, and the salon page shows where it fails hardest.

WCL Section 32 voids any employee agreement to waive rights to benefits unless it relates to a specific claim and is Board-approved. — New York State Workers' Compensation Board, retrieved 2026-09-29

WCL Section 31 makes it a misdemeanor to deduct the cost of workers' compensation coverage from an employee's wages. — New York State Workers' Compensation Board, retrieved 2026-09-29

Deciding your own coverage deliberately

With no employees and no general contractor overhead, the choice is genuinely yours. Off the policy saves premium and leaves you uncovered; on the policy costs a policy with yourself in it and covers you.

The cheapest way to be uncovered deliberately is no policy at all, but a permit or license application will then need a CE-200, which means affirming no employees to a government entity. That attestation carries whistleblower exposure the Board makes no secret of.

With employees, the policy exists either way, and the only question is your own name on it. File the C-105.3 election with the carrier and keep the payroll effect in mind: your included remuneration is premium payroll, on top of coverage.

The premium math for that decision is on the cost breakdown, and the liability framing is on the who-needs page.

(866) 571-6729The Board invites the public to report a business running with employees on a CE-200, by online form, mail, or (866) 571-6729. — New York State Workers' Compensation Board, retrieved 2026-09-29

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