WC-134-3 (01-18) AI
"S" Corporations: Effective January 1, 2018, a shareholder in an "S" Corporation (as defined by Section 143.471.1,
RSMo) who owns at least 40% of the outstanding stock in that corporation may individually reject workers' compensation
insurance coverage for himself or herself by giving written notice of such rejection to the corporation and its workers'
compensation insurer. See, Section 287.037.2, RSMo, as amended in 2017. However, there have been no changes in the
law as to which employees are "countable" and which businesses are required to carry workers' compensation insurance
coverage. So, if the "S" Corporation operates in the construction industry (it erects, demolishes, alters or repairs
improvements), there still must be a workers' compensation insurance policy in force on the corporation itself and on any
of its employees who are not eligible to reject individual coverage on themselves - unless the corporation has no more
than two owners who are also the corporation's only employees and it has notified the Division of Workers' Compensation
that is has withdrawn from the provisions of the Missouri Workers' Compensation Law, as allowed by Section 287.090.5
RMSo. Likewise, an "S" Corporation operating in any industry other than construction that has at least five or more
employees still must have a workers' compensation insurance policy in force on the corporation itself and on any of its
employees who are not eligible to reject individual coverage on themselves. See, Sections 287.030.1(3), RSMo.
Statutory Employer: §287.040, RSMo, provides that certain independent contractors may be considered to be
“employees” of the person who hired them for workers’ compensation purposes, under the legal principle known as
“statutory employment.” Missouri Law does not define “independent contractor.” Missouri courts use three factors to
determine when a statutory employment relationship exists: (1) the work is performed pursuant to a contract; (2) the
injury occurs on or about the premises of the statutory employer; and (3) the work is in the usual course of the statutory
employer’s business. An employer cannot avoid its workers’ compensation liability by hiring independent contractors to
perform jobs that would otherwise be performed by its employees. A contract need not be in writing. The Missouri courts
have ruled that the “employer’s premises” can include a location where the employer is carrying on its business
temporarily. As a construction industry employer you may be held responsible to pay workers’ compensation benefits to
an independent contractor or uninsured subcontractor or their employees. The immediate contractor or subcontractor is
liable as an employer of the employees of the subcontractor. The liability of the immediate employer is primary and that
of the others is secondary and any compensation benefits that are paid by those who are secondarily liable may be
recovered from those primarily liable.
P
lease Note: A general contractor can require subcontractors to carry workers’ compensation insurance. Generally, the
Law says that the general contractor is liable for any injuries sustained by uninsured subcontractors or their uninsured
employees (§287.040, RSMo). Because of this, the general contractor’s insurer will charge an additional premium if the
subcontractor cannot provide proof of coverage, even if the subcontractor has no employees. If the general contractor says
he/she will not hire the subcontractor unless he/she has a policy and insures himself/herself, the subcontractor would need
to buy a policy covering their business or himself/herself or work for a general contractor who does not make this a
requirement.
C
riminal Penalties: §287.128, RSMo makes it unlawful for any person to knowingly make or cause to be made any false
or fraudulent material statement or material representation for the purpose of obtaining or denying any benefit. This is
considered a class E felony punishable by fine up to $10,000 or double the value of the fraud whichever is greater. A
subsequent violation is a class D felony.
A
ny person who knowingly misrepresents any fact in order to obtain workers' compensation insurance at less than the
proper rate for that insurance shall be guilty of a class A misdemeanor. A subsequent violation is a class E felony. Any
employer who knowingly fails to insure his liability pursuant to this chapter shall be guilty of a class A misdemeanor and,
in addition, is liable to the state of Missouri for a penalty in an amount up to three times the annual premium the employer
would have paid had such employer been insured or up to $50,000, whichever amount is greater. A subsequent violation
is a class E felony.
F
urther, providing false information with the intent to deceive also can constitute a felony under §§570.090 (Forgery) and
575.040 (Perjury), and a misdemeanor under §§575.050 (False Affidavit) and 575.060 (False Declaration).
Missouri Division of Workers’ Compensation is an equal opportunity employer/program.
Auxiliary aids and services are available upon request to individuals with disabilities.
TDD/TTY: 800-735-2966 Relay Missouri: 711