Are Worker’s compensation and General liability insurance required in Illinois for the officer of an S-Corp?

[SGB]

What is the name of your state? IL

My small S-Corp is incorporated in WY and I’m the president. I listed my son as Vice President but he lives with his mother. I have no employees. I work through my company at client sites as a contractor on Corp-to -Corp basis through middlemen staffing agencies. Client pays staffing agency vendor, vendor pays my company and my company pays me as a full time employee of my company on W2.

I don’t live or work in Wyoming. I live and work in IL and pay taxes to IL state. Also I work 100% remotely from home for client during these COVID times. I have a new contract through a staffing agency vendor and they are asking for worker’s compensation and general liability insurance. I understand an officer of a corporation can apply for a waiver from workers compensation.

What do I need to do to waive worker’s compensation in IL? Do I need to apply for “Right to do Business in IL” first?

Is there anyway to waive from general liability insurance as well or work around it?

Thanks!

 

[adjusterjack]

Are Worker’s compensation and General liability insurance required in Illinois for the officer of an S-Corp?

It's "required" by the agency and that's what counts.

What do I need to do to waive worker’s compensation in IL?

Nothing. You have no employees so there is no requirement that you buy a WC policy. IL has no "opt out" form. You'll just have to convince the agency that you have no employees and are not required to have a policy.

Illinois WC Act:

https://www2.illinois.gov/sites/iwcc/Documents/act.pdf

The agency may still require it and the GL regardless. If you don't provide both, you don't get the work.

No matter what kind of services you perform you are foolish to go without General and Professional Liability Insurance. A lawsuit can put you into the poor house.

 

[SGB]

I was thinking if I’m working 100% remotely do these matter. The agency said I can sign a waiver with the IL state for WC but still need GL

 

[adjusterjack]

I was thinking if I’m working 100% remotely do these matter.

The GL and Professional Liability do matter. Whatever services you perform can go wrong at the customer end and result in a lawsuit. Your corporation is not going to protect you when you get sued personally for something that you got wrong.

Find yourself an independent commercial insurance agent and get the proper insurance for your business.

The agency said I can sign a waiver with the IL state for WC

You'll have to call the IL WC Commission and see if there's a form that will satisfy the agency.

https://www2.illinois.gov/sites/iwcc/Pages/default.aspx

 

[Taxing Matters]

What is the name of your state? IL

My small S-Corp is incorporated in WY and I’m the president. I listed my son as Vice President but he lives with his mother. I have no employees.

You do in fact have at least one employee: yourself. Every corporation that does anything has at least one employee. Corporations can't do anyting by themselves.

If you do all the work in IL, why form the S-corporation in WY? You end up having to file as a foreign corporation in IL anyway to do business there, so it creates an additional layer of filing and fees and I see no benefit you get for that.

I have a new contract through a staffing agency vendor and they are asking for worker’s compensation and general liability insurance.

The staffing agency can ask for that even if the state law wouldn't require you to have it in this circumstance. That's a matter of negotiation between you. If the staffing agency stands firm, you may be left with a choice of finding a different staffing agency or getting the insurance the staffing agency asks for.

 

[zddoodah]

What is the name of your state? IL

My small S-Corp is incorporated in WY

If you're in Illinois, why did you incorporate in Wyoming?

I listed my son as Vice President but he lives with his mother.

What difference does it make where he lives. Does he actually perform work for the corporation? If not, why did you make him an officer?

What do I need to do to waive worker’s compensation in IL? Do I need to apply for “Right to do Business in IL” first?

Is there anyway to waive from general liability insurance as well or work around it?

I don't really understand these questions. If your client wants you have have WC and GL coverage, then you either get that coverage, convince the client that you aren't required to have WC coverage,* or don't do business with that client.

* - I would be rather surprised if a single-owner corporation whose only employee is the owner+ is required to carry WC coverage. As for CGL coverage, no law requires it for anyone (outside of auto liability insurance).

+ - I think you might have a hard time convincing someone that you are an independent contractor and not an employee.

 

[adjusterjack]

I would be rather surprised if a single-owner corporation whose only employee is the owner+ is required to carry WC coverage.

In IL corporate officers can elect not to be covered by WC. I checked the statute. Common in other states as well.

I think you might have a hard time convincing someone that you are an independent contractor and not an employee.

Convinced me.

I work through my company at client sites as a contractor on Corp-to -Corp basis through middlemen staffing agencies. Client pays staffing agency vendor, vendor pays my company

 

[doucar]

my company pays me as a full time employee of my company on W2.
Looks like an employee to me.

 

[Taxing Matters]

Convinced me.

And how is he an independent contractor of his own corporation? The president/CEO of a corporation is clearly an employee. You're not fully grasping what's going on here if you aren't seeing it.

 

[PayrollHRGuy]

When you are working for a staffing agency usually they are your employer. If you receive a W2 from the staffing agency somebody has to have WC on you.

 

[doucar]

My guess his LLC contracts with the staffing agency and the staffing agency pays the LLC and then the LLC pays him through a w2 paycheck. He is clearly an employee of the LLC.

 

[PayrollHRGuy]

My guess his LLC contracts with the staffing agency and the staffing agency pays the LLC and then the LLC pays him through a w2 paycheck. He is clearly an employee of the LLC.

The OP is very unlcear.

 

[Zigner]

My guess his LLC contracts with the staffing agency and the staffing agency pays the LLC and then the LLC pays him through a w2 paycheck. He is clearly an employee of the LLC.

What LLC?

 

[Zigner]

My small S-Corp is incorporated in WY and I’m the president. I listed my son as Vice President but he lives with his mother. I have no employees. I work through my company at client sites as a contractor on Corp-to -Corp basis through middlemen staffing agencies. Client pays staffing agency vendor, vendor pays my company and my company pays me as a full time employee of my company on W2.

I don't think there's anything unclear. The OP lays it out in black and white in this paragraph.

 

[Zigner]

I have a new contract through a staffing agency vendor and they are asking for worker’s compensation and general liability insurance. I understand an officer of a corporation can apply for a waiver from workers compensation.

What do I need to do to waive worker’s compensation in IL? Do I need to apply for “Right to do Business in IL” first?

Is there anyway to waive from general liability insurance as well or work around it?

Thanks!

You have a couple of problems. You may be legally allowed to "waive" the work-comp requirement with the state, but you'd have to convince your client to accept such a waiver. More importantly, if they want you to carry general liability insurance as a condition of doing work for them, then you need to carry it.