Corporate Executives and Partners

Corporate Executives and Partners

Depending upon an individual’s position within a company, he may or may not be covered by workers’ compensation. Generally, it is “employees” who may claim workers’ compensation benefits. Officers, such as a chief operating officer, president, corporate secretary, or chief financial officer, are usually covered just like regular employees. However, if such an officer gains a controlling ownership interest in the corporation, workers’ compensation coverage may be lost. This is because the corporation has essentially become the alter ego of the officer and vice-versa. If workers’ compensation coverage was still to be extended to the officer in such a situation, it would be like calling the officer both the employer and the employee. For coverage to be affected, some states require that the officer serve on the corporation’s board of directors in addition to owning shares in the corporation.

Partners cannot be “employees” and thus are ineligible for workers’ compensation coverage. At its essence, a partnership is a business that is owned by the partners without incorporation, which would provide the business with its own separate identity. As the partnership is not a separate entity from the partners who own it, the partners are essentially the “employers” making it incongruous to also term them “employees.” This is generally so even if a partner performs work at the business. Despite the prohibition against coverage, however, a few states do allow the election of coverage for partners.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.