Georgia Workers' Compensation: The Three-Employee Rule, Farm Exclusion and What Happens If You Skip It
Georgia requires most employers to carry workers' compensation insurance once they regularly have three or more workers. The threshold sounds simple, but the count is not. Part-time staff, seasonal hires, and the owners of corporations and LLCs all affect the number, and two groups are excluded entirely. This guide covers the Georgia workers compensation requirements, how to comply, and what the state can do if you don't.
This content is informational, not legal or tax advice. Workers' compensation rules depend on the statute, State Board of Workers' Compensation rules, and your insurance contract. Talk with a qualified Georgia attorney or insurance professional, and a CPA if worker classification is involved, before you rely on this for a specific situation.
The Three-Employee Rule
Under O.C.G.A. 34-9-2, a Georgia employer must carry workers' compensation coverage when it regularly has three or more employees in the same business. The rule is about how many people you regularly employ, not how many you have on payroll in a single week. Two counting rules come up most often:
- Part-time workers count if they work regularly. Someone who works 10 hours every week is part of your count. Help you bring in once for a single job is not a regular employee.
- Seasonal workers count if your business regularly hires them each season. A landscaping company that brings back the same spring crew every year is counting those workers, even though they only work part of the year.
If you are close to the line, count the people you have regularly scheduled over the past year and the people you expect to schedule next year. If the number reaches three, plan to buy coverage before the third worker starts.
Who Is Excluded
Two groups are left out of the requirement entirely: farm laborers and domestic servants. The exclusion applies to the worker's job, not to the industry in general. Don't assume that a business touching agriculture or a household fits the exclusion without checking the statute and the State Board's position on your facts.
The farm exclusion is a common source of confusion. Unemployment insurance uses its own farm rules and earnings thresholds, and those do not decide whether you must carry workers' compensation. Keep the two programs separate when you read anything about farm workers.
Corporations, LLCs, and Owners
Owners are not always outside the count. If your business is a corporation or an LLC, its officers or members count toward the three. Up to five of them may waive coverage on themselves by signing Form WC-10 and filing it with the insurance carrier.
A waiver does not reduce the head count. A three-member LLC where every member signs Form WC-10 still has three counted people, so it still needs coverage for the business. Waivers are a way to exclude owners from benefits, not a way to avoid the requirement.
Sole proprietors and partners are treated as employers, not employees, so they do not count toward the three. They may elect to be covered anyway by telling their insurer in writing.
Real estate salespersons have a contractor carve-out under the workers' compensation rules. Because the details matter, confirm how it applies to your brokerage with the State Board of Workers' Compensation before you rely on it.
How to Comply
Georgia gives employers two lawful routes to coverage. You can buy a policy from a licensed insurer, or you can be approved to self-insure under O.C.G.A. 34-9-121. Georgia does not run a state fund, so there is no state policy to buy.
Buying a Policy
Most small employers buy a policy from a private insurer licensed in Georgia. The premium is based on your payroll and your job classifications, so the cost varies widely from one business to the next. Ask an insurance agent for a quote that lists your actual payroll and job codes. Once the policy is in force, the insurer files the evidence of coverage with the State Board.
If you cannot find an insurer willing to write your business, ask about the assigned risk plan. It is administered by the National Council on Compensation Insurance (NCCI). The State Board of Workers' Compensation does not sell insurance, so direct any coverage questions to an agent or to NCCI.
Self-Insurance
Self-insurance is built for large employers, and the requirements are substantial:
- A written application and a $500 processing fee.
- Membership in the Georgia Self-Insurers Guaranty Trust Fund.
- Certification by the State Board of Workers' Compensation.
- Security by bond or letter of credit of no less than $250,000.
- Excess insurance.
For most small businesses, self-insurance is not a realistic option. Plan to buy a policy unless your payroll and finances justify the security and oversight that self-insurance requires.
Out-of-State Construction Employers
A construction employer based outside Georgia may be able to comply by using a policy from its home state, but only if the home state reciprocates. Confirm the reciprocity rules and get written confirmation from your insurer before you start work in Georgia.
Independent Contractor or Employee?
Misclassifying workers is one of the fastest ways to end up uninsured without realizing it. Under O.C.G.A. 34-9-2, a worker is an independent contractor when all three of these conditions are met:
- There is a contract that intends an independent contractor relationship.
- The business does not control the time, manner and method of the work.
- The worker is paid by the job or by the unit, not by salary or by the hour.
A contract that calls someone a contractor does not settle the question. If you set the schedule, direct how the work gets done, and pay by the hour, a worker labeled a 1099 contractor may still count as your employee for your three-person total. Review the actual working relationship, not just the paperwork.
What Happens If You Skip It
Going without coverage carries consequences on several fronts. The main ones are set out below.
- Criminal exposure. Failing to carry coverage, or failing to file evidence of coverage, is a misdemeanor under O.C.G.A. 34-9-126.
- Higher benefits in a claim. If an injured worker files a covered claim against an uninsured employer, the compensation award is increased by 10 percent, and the employer pays the injured worker's attorney's fee.
- State Board penalties. The State Board of Workers' Compensation may assess its own penalties for noncompliance. Published sources describe those amounts differently, so check with the State Board of Workers' Compensation for the current penalty schedule before you make any decision based on a dollar figure.
The penalty for not having insurance is not a one-time fine you can budget and forget. An uninsured employer faces the cost of the claim itself, the increased award, the injured worker's legal fees, and any penalties the State Board imposes. A premium is almost always cheaper than that exposure.
Benefit amounts are set by the State Board of Workers' Compensation each year. Check the Board for the current figures rather than relying on older articles, including any that list a weekly maximum.
Next Steps Checklist
- Count your workers. Include regular part-time staff, seasonal workers you hire every season, and the officers or members of any corporation or LLC.
- Check the exclusions and waivers. Confirm whether farm or domestic work applies to your business. If an owner wants to waive coverage, have that owner sign Form WC-10 and file it with the carrier, remembering that the waiver does not reduce your head count.
- Classify every worker. Test each contractor against all three conditions, and keep your contracts and pay records consistent with the classification you choose.
- Get quotes. Ask a licensed Georgia insurance agent for a quote based on your payroll and job classes. If the market declines you, ask about the assigned risk plan through NCCI.
- Keep evidence of coverage. Confirm that your insurer has filed the required evidence of coverage with the State Board.
Before you hire the people who will push you over the threshold, read Georgia hiring your first employee for the payroll and registration steps that come with bringing on staff. For the rest of your insurance picture, including liability and property coverage that may sit alongside your workers' compensation policy, see Georgia business insurance: what coverage do you need.
Reminder: this guide is informational, not legal or tax advice. Confirm the current rules with the State Board of Workers' Compensation and a qualified attorney or insurance professional before you act.