South Carolina Workers’ Comp Exemption
We file workers’ compensation exemptions for South Carolina 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 South Carolina
Any employer that regularly has four or more workers, full-time or part-time (including family members), must carry workers' compensation insurance. Separately and independently, an employer whose total annual payroll in the preceding calendar year was less than $3,000 is exempt regardless of how many workers it employed during that period (S.C. Code §42-1-360, per the SC Workers' Compensation Commission's own coverage-requirements summary). This is a genuine payroll-floor exemption layered on top of the headcount test, not a simple headcount-only rule.
Who can be excluded in South Carolina
Sole proprietors
Excluded from mandatory coverage by default. May elect INCLUSION if 'actively engaged in the operation of the business,' by notifying the insurer; the statute text located did not describe a separate state-agency filing for this election (S.C. Code §42-1-130).
Partners
Same treatment as sole proprietors: excluded by default, may elect inclusion by notifying the insurer.
LLC members
Secondary sources consistently describe LLC members as excluded by default with the same voluntary-inclusion option as sole proprietors and partners, but this could not be confirmed against the primary statute text that was actually fetched (§42-1-130, as summarized by the official scstatehouse.gov page, did not explicitly mention LLC members). Treat this item as medium confidence, not verified against primary text.
Corporate officers
Covered as employees by default (unlike sole proprietors/partners). A corporate officer may reject coverage under S.C. Code §42-1-520 and instead be limited to a common-law action for injury (in which the employer may raise contributory negligence, fellow-servant negligence, and assumption-of-risk defenses). No cap on the number of officers who may reject coverage was found in the statute text or the official form.
Construction rules in South Carolina
No South Carolina construction-industry-specific coverage rule (beyond the general 4-employee/$3,000-payroll test) was found in the sources reviewed — set to null rather than guessed.
How the exemption is filed
Corporate officer rejection: the officer completes and signs (with notarization) WCC Form #5, 'Corporate Officer Notice to Reject,' addressed to the employer and the employer's insurance carrier, citing S.C. Code §42-1-520; the rejection becomes effective no sooner than the day after the officer signs it. No fee is stated on the form itself. The South Carolina Workers' Compensation Commission's Coverage Division is the point of contact for questions. Sole proprietor/partner election to be INCLUDED is made by notice to the insurer per §42-1-130; no distinct Commission form for this was identified. Employers whose coverage status changes (e.g., voluntarily carrying coverage while otherwise exempt, or later dropping it) use the Commission's Form 38 to notify the Commission.
- Statute
- S.C. Code §42-1-130 (employee definition; sole proprietor/partner election); §42-1-360 (exemption of casual employees and certain other employments — includes the $3,000 payroll and small-employer exemptions); §42-1-520 (corporate officer rejection of coverage)
- Market
- Competitive — coverage is bought from a private carrier.
Notes and open questions
LLC-member treatment and any construction-specific rule are the two weakest points in this record — both rest on secondary sources or were simply absent from the primary text reviewed, not confirmed. The Commission's own 'Coverage Requirements' guidance document is dated October 9, 2009, so it may not reflect any statutory amendments since then; the $3,000/4-employee thresholds and §42-1-520 citation, however, were corroborated by the current scstatehouse.gov code page and the current Form #5 (revised 05/2013).
Sources
- https://www.wcc.sc.gov/sites/default/files/Documents/Footer/Archived_Documents/Coverage_Requirements.pdf
- https://www.scstatehouse.gov/code/t42c001.php
- https://wcc.sc.gov/sites/wcc/files/Documents/Header/Forms/Form5.pdf
Source material dated Coverage Requirements memo dated October 9, 2009; Form #5 revised 05/2013; scstatehouse.gov code page reflects current codification, accessed 2026-08-30.. Compiled from official South Carolina sources as a starting point, not legal advice — rules change, and your situation may turn on facts this page cannot see. Confirm with South Carolina Workers' Compensation Commission or ask us and we’ll check it for you.
Workers' comp exemption filing in South Carolina
Tell us about your South Carolina business and we'll confirm whether you qualify for an exemption.