Glossary  /  Classification & payroll

Election in or out

Also called officer exclusion, owner coverage election

Election in or out is the choice owners and officers make about whether they are personally covered by their business's workers' compensation policy, which in turn determines whether their pay counts toward premium.

Defaults run in opposite directions depending on the structure. Corporate officers are usually covered unless they elect out; sole proprietors and partners are usually excluded unless they elect in. LLC members fall in different places depending on the state and how the entity is taxed.

The election is a filed choice, not an informal one, and it has consequences beyond premium: an owner who elected out has no workers' compensation coverage if they are injured on the job.

Related terms

  • Officer payroll capAn officer payroll cap is a state-set limit on how much of an included officer's or owner's compensation counts toward workers' compensation premium, with a floor as well as a ceiling.
  • RemunerationRemuneration is the workers' compensation term for all compensation that counts toward premium, which is broader than take-home pay and broader than what most businesses think of as payroll.

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