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Workers' Comp Exemptions for Subcontractors: What to Accept and What to Watch

By SubCover HQ · Updated Oct 29, 2026 · 4 min read

Sooner or later a sub hands you a certificate with general liability and auto, and the workers' comp section is blank. "I don't have any employees, so I don't need it." Sometimes that's true. Sometimes it's a problem that lands on you. Here's how to handle it.

Why a missing workers' comp policy can become your problem

In many states, if a subcontractor's worker gets hurt and the sub has no workers' comp, the general contractor or hiring party above them can be treated as the responsible employer for that injury. Rules vary a lot by state, but the risk is real enough that most contracts require subs to carry workers' comp or document a valid exemption.

There's also a cost you'll see every year: when your own workers' comp insurer audits your policy, it usually asks for certificates from every sub you paid. For subs who can't show coverage, many insurers add the money you paid them to your payroll and charge you premium on it. A missing certificate can turn into a surprise bill months after the job ended.

The common situations

1. Sole proprietor or owner with no employees

Many states let sole proprietors, partners, and some LLC members or corporate officers opt out of covering themselves. If the sub truly works alone, they may not be required to carry a policy. The catch is the word "truly." A sub who brings a helper, a cousin, or a day laborer to your job now has an employee, and the exemption may not cover that person.

2. A state-issued exemption certificate

Some states issue formal exemption certificates or registrations, especially for construction, and some require them before an owner or officer can opt out. If your state has one, ask for a copy, check the name matches the sub's legal entity, and check the dates. These exemptions usually cover only the named officers or owners, not employees.

3. A "ghost policy"

Some subs buy a minimum-premium workers' comp policy that excludes the owner and is written as if there are no employees. It produces a certificate that looks normal. It may satisfy a paperwork check, but if there's no covered payroll, there may be no coverage for the people actually doing the work. If a one-person sub shows up with a crew, ask questions.

4. Texas and opting out entirely

Texas allows most private employers to choose not to carry workers' comp at all ("non-subscribers"). Your contract can still require it. Decide your policy in writing rather than case by case.

What to collect from a sub with no workers' comp

1. A written statement that they have no employees and won't bring anyone to your job, signed by the owner. Many companies use a standard affidavit or independent contractor form; have your attorney approve yours.
2. The state exemption certificate, if your state issues one.
3. A current COI for the other lines: general liability and auto still apply, and your additional insured and waiver requirements don't go away.
4. A check with your own insurer on how it treats exempt subs at audit. Some accept a signed affidavit; some charge premium anyway.

Red flags

• A "no employees" sub on a job that clearly needs a crew.
• An exemption issued to a different entity name than the one on your contract.
• A workers' comp policy with the right dates but no state listed where your job is.
• A sub whose workers' comp suddenly disappears at renewal while their GL stays.

Track it like any other policy

Exemptions and workers' comp policies expire just like liability policies, often on different dates. Record them separately. Our free COI tracking spreadsheet has a column for it, and the subcontractor COI checklist includes the exemption check. For what to require across all lines, see insurance limits to require from subcontractors.

SubCover HQ tracks workers' comp and exemptions along with every other policy, and flags subs whose paperwork doesn't line up before your auditor does.

Frequently asked questions

Can a sub with no employees still give me a waiver of subrogation on workers' comp?

Not if there's no workers' comp policy. A waiver of subrogation is an endorsement to a policy, so without a policy there's nothing to endorse. Your contract's indemnity terms and the sub's liability coverage do the work instead.

Does my general liability policy cover injuries to a sub's workers?

Generally, injuries to workers are meant to be handled by workers' comp, and GL policies often have exclusions or limitations here. Ask your insurance professional how your policies respond before relying on them.

Is a signed affidavit enough?

It depends on your state and your insurer. It's good documentation, and some insurers accept it at audit, but it doesn't create coverage. Ask your insurer and attorney what they want to see.

This guide is general information, not insurance or legal advice. Workers' compensation rules vary significantly by state. Your contracts, insurance professional, and attorney determine what you should require.