You’ve probably heard the term “comp exempt” tossed around a lot—especially if you’re running a small shop or working as a solo operator. Maybe you’ve even skipped getting workers comp coverage because you “don’t need it.”

But here’s the truth: just because you’re legally exempt doesn’t mean you’re off the hook.

If you’re hiring uninsured 1099 labor…
If you’re getting asked for certificates by GCs or clients…
If you’ve got anyone helping you get the job done…

Then you’re likely still exposed—and a single injury could cost you everything.

Comp exempt status usually applies to:

• Solo owners

• Partnerships

• Officers of small corporations

• Anyone not required by law to carry workers compensation insurance

But—and this is a big “but”—requirements vary by state, industry, and business structure. Some states say 3 employees = mandatory coverage. Others say 4. Some count owners in that total. Others don’t.

And no matter what state you’re in, if you’re hiring uninsured 1099s, you need coverage—because the liability rolls up to you.

✅ Use this state-by-state guide to check your local rules, or keep scrolling—we’ve outlined the ones we cover below.

Let’s say you’re technically exempt from carrying comp.

Cool. But what happens when:

• A GC asks for your certificate before letting you start a job?

• You hire a helper for a few days and he tweaks his back?

• One of your subcontractors forgets to renew their policy?

If someone is working, they need to be covered under someone’s workers comp policy.
If it’s not theirs… it’s yours.

Here’s why so many clients require you to show a valid certificate:

Let’s say you’re a cabinet installer. You usually work alone. But one week, you bring in a helper for a big job.

Even if you’re exempt and carrying a ghost policy, you’ll pay premium on whatever you pay that subcontractor—because he’s uninsured.

Example:

• Let’s say your rate is 10% of payroll.

• You pay him $1,500 for the week.

• You’ll owe $150 in premium, just for that one job.

Now imagine doing that 10 times a year…

Let’s say that same helper gets injured. You didn’t know he let his coverage lapse.
Too bad—you’re on the hook for the claim.

And here’s the real killer:
That claim stays on your record and drives up your comp rate for 3–5 years.
Even one $10,000 claim could cost you tens of thousands more in long-term premiums.

This is the one that really gets contractors sideways.

Let’s say you’re working under a GC—and you don’t have coverage.
He doesn’t either, because his policy was canceled.
And you have a helper who isn’t insured.

Now the property owner is technically responsible. Yeah… that guy. The one who owns a print shop and thought he was just paying for new cabinetry.

One mistake, and liability snowballs fast.

You didn’t start a business to lose everything over one busted ankle.
You worked hard. You probably built it from nothing. Or maybe you’re just now striking out on your own.

Either way, don’t leave the whole thing exposed to save a few hundred bucks.

Medical costs are out of control.
We had a client—a 100% office-based company—get hit with a $100,000+ claim after an employee slipped walking in during a rainy morning.
No tools. No heavy lifting. Just bad luck and a broken wrist.

Imagine that happening to you—or to someone who’s working under you.
If you’re comp exempt, and they get hurt, the ambulance-chasing lawyers will come knocking.

Cool. Here’s the follow-up question:

Are you 100% sure their policy is active?
Did they pay their last installment?
Have you checked the cert against the carrier database?

Because if they didn’t pay, and the policy lapses—you’re it.
And that’s a roll of the dice no smart business owner should take.

Here’s the good news: getting covered doesn’t have to cost you a fortune.

Even if you’re:

• Comp exempt

• A sole prop

• Have no payroll

• Just need coverage for licensing or GCs

…you still have options.

Every state has a workers comp assigned risk pool—a guaranteed coverage option for folks who can’t get insured on the standard market.

In most cases, the minimum premium for ghost policies in the state pool is under $1,500/year.

But even better?

We’ve got programs that:

• Cost hundreds less than state pool rates

• Include blanket endorsements

• Get you proof of coverage fast

• Let you stay exempt while still protected

👉 Learn more about ghost policies here

Every state has its own quirks. Here are the basics for our service area:

Georgia

• Comp required for 3+ employees, including officers

• Sole props and partners are exempt, but can opt in

• If you subcontract work, you may be liable for their employees if they aren’t covered

• Official rules: Georgia State Board of Workers’ Comp

North Carolina

• Coverage required for 3+ employees, including minors

• Officers can opt out, but still count toward the employee count

• Agricultural employers: only required with 10+ workers

• Radiation = always required

• Official rules: NC Industrial Commission

South Carolina

• Required if you have 4+ employees, part-time or full-time

• Certain industries (agriculture, real estate, etc.) are exempt

• Sole props and LLCs may opt in

• Low payroll companies (<$3,000/yr) may qualify for exemption

• Official rules: SC Workers’ Comp Commission

Tennessee

• All construction and coal trades: required regardless of employee count

• All other businesses: required if you have 5+ employees

• Officers are counted, even if excluded from coverage

• Official rules: TN Dept. of Labor & Workforce

If you’re truly working alone, never hire anyone, and don’t step foot on a client site… maybe you can afford to go without workers comp.

But for everyone else?

It’s not just a legal question. It’s a liability one.
And with affordable ghost policy options out there, you don’t have to leave yourself wide open.

Want help figuring out what you really need—and what you don’t?