What is a Workers' Compensation Waiver?

A workers' compensation waiver is a document that allows a worker to relinquish his rights to workers' compensation benefits. It must be submitted to the appropriate workers' compensation authority. In the United States, nearly all 50 states put laws into affect to guarantee the coverage of all employees through employer paid insurance. Each state determines under which circumstances individuals can waive their rights, but there are a few commonalities.

The Workers' Compensation Board sprang from the needs of workers who were injured in job-related accidents. It allows for medical treatment and rehabilitative care. To help workers meet their financial needs during recovery, it can also provides them with a percentage of their wages. When an employee elects to use workers' compensation, he typically waives his right to pursue legal action against the employer.

According to state laws, it is presumed that each member of a business will be covered under workers' compensation. Employers with one or more employees cannot file a workers' compensation waiver. Also, self-employed individuals, sole proprietors, members of a limited liability company or partnership, and corporate individuals owning more than 25% of common stock, can elect to file waivers if they choose.

Lines become blurred in situations when a person is self-employed or a managing partner in a business. As an owner, he or she has a choice to make regarding a workers' compensation waiver. Insurance payments can be made in advance to insure coverage for future use, or payments can be made out of pocket if a work-related injury occurs. Premium payments and the danger associated with the job is often the deciding factor. If funds are available, many business owners opt for workers' compensation as a precaution.

Determining the need for a workers' compensation waiver also becomes a bit more complicated when businesses are performing work in other states. If a sole proprietor or self-employed person takes on work in another state, he or she may want to inquire about the compensation laws in that state as well. Owners may have to file additional waivers, or should at least determine which state laws will take precedence in case of an incident.

If coverage is not needed, the workers' compensation waiver must be filed with the local Workers' Compensation Board requesting exemption. Generally, each state has a form that must be submitted. The document lists the business name, owner, why the waiver is being requested, and clearly states that rights are being waived for coverage under the Workers' Compensation Act. The document must be signed, dated, and filed with the state's Workers' Compensation Board.