Can a Business Owner Be Excluded from Connecticut Workers' Compensation Coverage?

What Makes a Connecticut Owner Excludable?

Under Connecticut General Statutes § 19‑29.8, a business owner may be excluded from workers' compensation if they meet specific criteria. The law requires that the owner is not actively engaged in the day‑to‑day operations of the business, does not receive a salary or wages from the company, and is not a direct participant in the business's activities. These exclusions are designed to differentiate owners who merely hold ownership stakes from those who work on the job site.

Key Legal Requirements for Exclusion

• Ownership percentage: Owners with 50% or more of the business typically cannot be excluded because they are considered "involved" in the business.
• Employment status: Owners must not be classified as employees or contractors; they must not perform tasks that qualify as "work performed for the employer."
• Compensation: Owners who receive a salary, wages, or other compensation directly from the business are automatically covered.
• Active participation: Even if not paid, owners who regularly oversee operations, supervise staff, or make daily business decisions are considered employees for coverage purposes.

Common Misconceptions

Many small business owners assume that simply holding a title of "owner" protects them from workers' comp. That is not true. The law looks at actual day‑to‑day involvement and compensation, not the title alone. Additionally, owners who are members of a corporation or LLC that files a workers' comp policy may still be covered if the policy is written to include them, regardless of the statutory exclusion.

Practical Steps to Secure Proper Coverage

1. Document Roles: Maintain detailed job descriptions and time‑tracking logs that separate owners' administrative tasks from operational work.

2. Separate Compensation: If an owner receives any form of direct payment, they must be covered. Consider restructuring compensation to avoid this, but only after consulting a legal advisor.

3. Policy Language: Work with your insurer to confirm that the policy's language reflects your ownership status and the exclusions that apply.

4. Legal Counsel: Engage a Connecticut‑licensed attorney familiar with workers' comp law to review ownership structures and potential exposure.

When Exclusion Is Not Enough

Even if an owner qualifies for exclusion, the business must still maintain adequate coverage for all employees. Failure to do so can result in penalties, fines, and potential liability for the owner if an employee is injured on the job.

Summary of Owner Exclusion Criteria