Arizona Workers’ Comp Exemption
We file workers’ compensation exemptions for Arizona sole proprietors, LLC members, and corporate officers. Send us your details and we’ll confirm whether you qualify and handle the filing.
When coverage is required in Arizona
Arizona has no minimum employee-count threshold — any employer that employs workers or operatives regularly employed must secure coverage (A.R.S. § 23-902). Domestic servants are the main carve-out from mandatory coverage (employers of domestic servants may voluntarily opt in). Genuine independent contractors (per statutory criteria) are not employees for this purpose.
Who can be excluded in Arizona
Sole proprietors
Not automatically an "employee" under the Act. A sole proprietor may elect to be covered by written acceptance, subject to the insurance carrier's discretion (A.R.S. § 23-901(6)(i)). Separately, a sole proprietor who performs services for another business can sign a mutual waiver with that business's insurance carrier (A.R.S. § 23-961(N)) so the hiring business owes no coverage or premium obligation for that sole proprietor.
Partners
A working partner is not automatically an employee; may elect coverage by written acceptance, at the discretion of the insurance carrier (A.R.S. § 23-901(6)(h)).
LLC members
Members owning LESS than 50% of the membership interest are automatically treated as covered employees. Members owning 50% or MORE are excluded by default and may elect coverage in writing, subject to carrier acceptance (A.R.S. § 23-901(6)(q)-(r)).
Corporate officers
The same 50% test applies to corporate shareholders/officers: those owning less than 50% of the beneficial interest are automatically covered employees; those owning 50% or more are excluded by default and may elect coverage in writing, subject to carrier acceptance (A.R.S. § 23-901(6)(s)-(t)). No cap on the number of officers/shareholders who may be excluded was found in the statute.
How the exemption is filed
Arizona has no general state-run exemption certificate or registry for owners/officers. Coverage status turns entirely on the 50%-ownership test and, where election is available, on a written acceptance that the insurance carrier agrees to endorse onto the policy — there is no Industrial Commission of Arizona (ICA) filing for this. The only ICA-adjacent document identified during this research was an ICA "Employee Rejection of Terms" form, which is a different mechanism (an individual employee's rejection of the Act generally) and not specific to owners/officers.
- Form
- No state exemption form — see above
- Statute
- A.R.S. §§ 23-901, 23-902, 23-961
- Market
- Competitive — coverage is bought from a private carrier.
Notes and open questions
azica.gov blocked automated fetches (HTTP 403) on every attempt during this research, including via a direct curl with a browser user-agent, so I relied on the Arizona State Legislature's own statute text (azleg.gov) instead, which I was able to fetch directly. A secondary source's search-engine summary referenced a form called 'Revocation of Election to Exclude Sole Shareholder or Two Executive Officers' and attributed it to the Industrial Commission of Arizona; on closer inspection this title actually belongs to a New York Workers' Compensation Board form (the C-105 series), not an Arizona ICA form — I've excluded it here rather than risk a state mix-up. Because I could not reach azica.gov directly, I could not confirm whether ICA publishes any optional owner/officer election paperwork of its own beyond what the statute describes.
Sources
- https://www.azleg.gov/ars/23/00901.htm
- https://www.azleg.gov/ars/23/00902.htm
- https://www.azleg.gov/ars/23/00961.htm
Source material dated Arizona Revised Statutes as currently codified on azleg.gov, accessed 2026-08-30 (statute pages carry no separate revision date). Compiled from official Arizona sources as a starting point, not legal advice — rules change, and your situation may turn on facts this page cannot see. Confirm with Industrial Commission of Arizona or ask us and we’ll check it for you.
Workers' comp exemption filing in Arizona
Tell us about your Arizona business and we'll confirm whether you qualify for an exemption.