Michigan Residential Builders License Practice Test

Who is NOT covered under a workers' compensation policy?

1. A full-time employee

2. A sole proprietor with employees

3. A sole proprietor with no employees

4. A part-time contractor

The correct answer is: A sole proprietor with no employees

A sole proprietor with no employees is not covered under a workers’ compensation policy because such policies are designed to protect employees in the event of work-related injuries or illnesses. A sole proprietor is considered self-employed and, therefore, does not have traditional employees to cover under this type of insurance. As a result, they are deemed to be responsible for their own safety and health without the need for workers' compensation. In contrast, a full-time employee, a sole proprietor with employees, and a part-time contractor all fall under situations where workers’ compensation coverage is applicable. Full-time employees are covered automatically by their employer's workers' compensation policy. A sole proprietor with employees is required to have coverage for those employees, ensuring that any work-related injuries are compensated. Similarly, part-time contractors may also be considered employees depending on the nature of their work relationship with the hiring entity, thus qualifying for coverage under workers' compensation policies.