Maryland
Workers' Comp Exemption
If a Maryland business has one or more employees, assume workers' compensation coverage is required unless a specific exception applies. For the owner personally, identify the entity first: sole proprietors use §9-227, partners use §9-219, and qualifying compensated officers or LLC members use §9-206 and the Commission's exclusion filing. In contracting work, also check principal-contractor exposure rather than treating an owner exclusion as proof that every worker on the job is outside the Act.
Entity types analyzed
- Sole proprietor
- LLC member
- Partner
- Corporate officer
Maryland starts with a broad one-employee coverage rule, but owner treatment depends sharply on the legal entity. A sole proprietor and partner are outside personal coverage unless they elect in, while a compensated corporate officer or LLC member starts as a covered employee and must fit Labor and Employment §9-206 to elect exclusion. The filing record matters because eligibility alone does not complete the election.
If a Maryland business has one or more employees, assume workers' compensation coverage is required unless a specific exception applies. For the owner personally, identify the entity first: sole proprietors use §9-227, partners use §9-219, and qualifying compensated officers or LLC members use §9-206 and the Commission's exclusion filing. In contracting work, also check principal-contractor exposure rather than treating an owner exclusion as proof that every worker on the job is outside the Act.
Owner treatment at a glance
Sole proprietorA sole proprietor is not a covered employee unless the proprietor elects coverage under §9-227 and devotes full time to the business. The election requires written notice to the Commission and insurer.
LLC memberA compensated LLC member is a covered employee, but a member owning at least 20% of the outstanding interests in profits may elect exemption under §9-206. The LLC must submit written notice to the Commission and insurer; CompHub provides the current public exclusion workflow.
PartnerA partner is not a covered employee unless the partnership elects to cover a full-time partner under §9-219. The election becomes effective only after written notice to the Commission and insurer.
Corporate officerA compensated corporate officer is a covered employee unless a §9-206 category applies. Close-corporation officers may elect exclusion; up to five officers of a non-close corporation may do so; farm-corporation and professional-corporation officers have specific 20% ownership conditions described in the statute.
Maryland's compliance question starts with the first employee, not with an owner certificate
The Maryland Workers' Compensation Commission tells employers that, with few exceptions, every employer in the state with one or more employees must provide workers' compensation coverage. That is the operational starting point before any owner election is considered. A small company does not gain a general employee-count exemption just because its founder may be personally outside coverage.
This matters when an owner-only business makes its first hire. The owner's own status and the employee's status are two separate questions. A sole proprietor who never elected personal coverage can still become an employer that must insure a newly hired worker; an LLC member who properly excluded themself can still operate an LLC that must cover the rest of the workforce.
The Commission's employer FAQ also states that failure to secure required insurance can lead to a fine of not more than $10,000, with responsible corporate officers potentially personally liable for the fine. That enforcement rule makes the worker inventory more important than the existence of an old exclusion document.
Sole proprietors and partners begin outside personal coverage and use an inclusion election if they want in
Maryland §9-227 says a sole proprietor is not a covered employee unless an election is made. A proprietor may elect coverage only if the proprietor devotes full time to the business, and the election does not become effective until written notice naming the covered individual is submitted to both the Commission and the insurer.
Partners follow a parallel but separate rule in §9-219. A partner is not a covered employee by default. The partnership may elect to make a full-time partner a covered employee, again using written notice to the Commission and insurer. The partnership, rather than the individual partner acting alone, is the entity making that election under the statutory text.
These default exclusions should not be confused with a certificate exempting the business. They answer whether the owner personally is a covered employee. If the proprietorship or partnership has employees, the business still returns to Maryland's one-or-more-employee coverage rule.
Section 9-206 creates a specific exclusion matrix for compensated officers and LLC members
A corporate officer or LLC member who provides compensated services starts as a covered employee under §9-206(a). The exclusion route is therefore an affirmative election, not the same default rule that applies to sole proprietors and partners. The statute lists the categories that can make that election instead of using one generic definition of owner.
Close-corporation officers may elect exclusion. Up to five officers of a non-close corporation may elect. A farm-corporation officer must be in a corporation earning at least 75% of its income from farm operations and own at least 20% of the outstanding stock. A professional-corporation officer must own at least 20%, perform the professional service, and meet the entity definition. An LLC member must own at least 20% of the outstanding interests in profits.
For the qualifying categories, the corporation or LLC submits written notice naming the owner to the Commission and insurer. The ownership percentage and entity classification are therefore facts to preserve with the filing. An exclusion that was valid before a sale of equity or entity conversion may no longer describe the current business.
Maryland's current filing workflow is visible in CompHub, and the filing record should be part of the compliance file
The Commission's public CompHub exclusion page now walks a requester through the §9-206 filing. It identifies the business type, insurance information, owner information, applicable statutory category, and signature steps. The page also states that officers or members of certain entities elect exclusion by filing the exclusion with the Commission.
The Commission still publishes IC-16 as an exclusion form. Its instructions tell the filer to submit the form to the Commission, send a copy to the company's insurer, and retain a copy. In practical terms, a complete file is more than an unsigned PDF: it includes the accepted Commission record, insurer notice, and the ownership facts supporting the selected statutory category.
If a customer or general contractor asks for proof, provide the current filing that actually matches the person and entity. Avoid describing an inclusion election by a sole proprietor or partner as an IC-16 exclusion, because those paths arise from different statutes and run in opposite directions.
Construction adds principal-contractor and classification risk even without a special construction head-count rule
Maryland's cited employer materials do not create a separate construction employee-count threshold like Florida or Tennessee. The ordinary one-employee starting rule remains important. The extra risk comes from who is treated as the employer when work is performed through contractors and subcontractors.
Section 9-508 can make a principal contractor liable for compensation to a covered employee of a subcontractor when the statutory conditions are met. The same section expressly recognizes the different owner categories: a properly excluded corporate officer or LLC member, a partner who was not elected into coverage, and a sole proprietor who did not elect coverage are treated differently from a covered employee in that principal-contractor analysis.
Maryland also has a Workplace Fraud Act framework for construction and landscaping that addresses worker classification. For a contractor, an owner election is therefore one document in a larger file that should also establish who performed the work, whether a subcontractor actually had employees, and what coverage applied to those workers.
Treat the first hire, ownership change, insurer change, and contractor relationship as Maryland reset events
Maryland's owner rules are built on facts that can change: full-time participation for sole proprietors and partners who elect in, ownership percentages for certain officers and LLC members, the corporation type, and the individual's office or membership role. A compliance record should be re-read against those facts after a recapitalization, conversion, or ownership transfer.
The insurer is also part of the statutory notice path. If the company changes carriers, do not assume the old insurer-facing record is enough for every purpose. Preserve the Commission filing and confirm how the current policy treats each working owner, particularly when the owner is on payroll but is supposed to be excluded.
Finally, re-run the coverage analysis before a new hire or new subcontracted project begins. The WCC's one-employee rule and §9-508 principal-contractor exposure can create obligations that are completely independent of whether one owner has a valid exclusion.
Maryland owner checklist
- Count actual employees first; Maryland generally starts coverage at one employee.
- Identify whether the working owner is a sole proprietor, partner, LLC member, or corporate officer before choosing a form.
- For a §9-206 exclusion, verify the exact entity/ownership category and preserve Commission plus insurer notice.
- Do not use an officer/LLC exclusion form for a sole proprietor or partner whose statutory path is an inclusion election.
- On contracted work, review §9-508 principal-contractor exposure and worker classification separately from owner status.
- Recheck the file after the first hire, insurer change, ownership transfer, entity conversion, or new subcontractor relationship.
Filing reference
Coverage ruleWith few exceptions, a Maryland employer with one or more employees must provide workers' compensation coverage. The owner analysis is separate: sole proprietors and partners are outside coverage by default unless they elect in, while compensated corporate officers and LLC members begin as covered employees but certain qualifying owners may elect exclusion under Labor and Employment §9-206.
Construction ruleMaryland does not publish a separate construction employee-count threshold in the cited WCC materials; the one-or-more-employee rule remains the starting point. Construction and other contracting work adds principal-contractor exposure under §9-508 and classification risk under Maryland's Workplace Fraud Act, so owner status does not by itself settle responsibility for subcontractor labor.
Form / electionIC-16 Exclusion Form / CompHub Exclusion Request for qualifying officers and LLC members; separate inclusion notice path for sole proprietors and partners who elect coverage
RenewalThe cited Maryland sources do not establish a universal annual renewal cycle for owner elections. Recheck the filing when ownership, entity type, officer/member status, insurer, principal-contractor relationships, or the workforce changes.
Effective periodFor §9-206 exclusions, the corporation or LLC must submit written notice to the Commission and insurer; for sole-proprietor and partner inclusions, the corresponding written notice is also required. Preserve the accepted filing rather than treating eligibility alone as an effective election.
Responsible agency
Maryland Workers' Compensation Commission
Official source library
These are the state-agency, statutory, or state-board materials used for this guide. The page was last source-checked on 2026-08-26.
- Maryland WCC — Employer FAQ
- Maryland General Assembly — Labor & Employment §9-206
- Maryland General Assembly — Labor & Employment §9-219
- Maryland General Assembly — Labor & Employment §9-227
- Maryland WCC CompHub — Exclusion Request
- Maryland WCC — IC-16 Exclusion Form
- Maryland General Assembly — Labor & Employment §9-508
- Maryland Department of Labor — Workplace Fraud Act Compliance