Montana Workers Compensation: Employer Requirements
Montana requires workers compensation from the first employee. Who is exempt, the three compensation plans, the six day filing rule and the penalties.
Montana Workers Compensation
Coverage from the first employee, three compensation plans to choose between, a six day filing deadline, and up to double premium if you go without
A contractor in Bozeman once asked me which of his policies would pay for a broken wrist. He had general liability, he had a health plan, and he had a signed offer letter for each of his three people. None of those pay a workers compensation claim in Montana, and the state says so in plain language: neither general liability nor health and accident insurance is a substitute.
His real problem was timing. He believed the obligation started at some employee count he had not reached yet. Montana has no such count. The duty attached the day his first employee started, and every week after that was a week the Uninsured Employers Fund could later price.
If you employ anyone in Montana, this is the rule set you work under: what triggers coverage, who is exempt, the three plans you choose between, the injury reporting deadlines and what going without costs.
Who Needs Coverage
Coverage is required from the first employee. MCA 39-71-401(1) states that the Workers' Compensation Act applies to all employers and to all employees, and that an employer with any employee in service under any appointment or contract of hire, expressed or implied, oral or written, must elect to be bound by compensation plan No. 1, 2 or 3.
There is no small employer floor to hide under. That is the single most useful thing to know about Montana, because a large share of states do set a threshold at two, three, four or five employees.
The full statutory list of covered and exempt employments sits in MCA 39-71-401, and it is worth reading once in full before you decide anyone on your payroll is outside it.
The definition of employer is deliberately broad. MCA 39-71-117 reaches each person, firm, voluntary association, limited liability company (LLC), limited liability partnership (LLP) and private corporation, and it names prime contractors explicitly. Minors count as employees, and so do workers who are not lawfully authorized to work, because MCA 39-71-118 includes aliens and minors whether lawfully or unlawfully employed.
Two provisions decide who covers a worker that another company supplies. The first works in your favor: a temporary service contractor is the employer of a temporary worker for premium and loss experience purposes, so the staffing agency insures its temps and their claims count against its record, not yours.
The second provision catches employers who think they have outsourced the problem. If you use a worker furnished by another company, you are presumed to be the employer for premium purposes unless there is substantial credible evidence that the supplying company retained control over all aspects of the work, at the start and through every phase of it.
Who Is Left Out
Montana's exemptions are a list of roles rather than a headcount rule. MCA 39-71-401(2) opens with an important qualifier: these employments are outside the Act unless the employer elects coverage for them and an insurer allows the election. Electing coverage is possible for almost every line below, and for owner-operators in physically risky trades it is usually the right call.
| Who | Covered by default? | How Montana treats it |
|---|---|---|
| Sole proprietor | No | Exempt under MCA 39-71-401(2)(d). May elect coverage if an insurer allows the election. A sole proprietor who regularly works away from a fixed business location must either elect personal coverage or hold an exemption certificate. |
| Working partner, LLP member, member-managed LLC member | No | Same exemption and the same election as a sole proprietor, and the same rule about working away from a fixed business location under MCA 39-71-401(3). |
| Corporate officer, manager of a manager-managed LLC | Yes, unless an exemption test is met | Exempt under MCA 39-71-401(2)(r) when the officer neither performs ordinary worker duties nor receives pay for them, or owns 10 percent or more of the entity, or is close family of an owner who does. The company may elect to cover them by written notice to the board and to the insurer. |
| Employees of a corporation or manager-managed LLC | Yes | MCA 39-71-401(4)(a) requires coverage for the employees no matter which officers are exempt. Naming someone an officer or a partner purely to strip coverage does not work (MCA 39-71-401(5)). |
| Spouse and dependent family members | No | Exempt when the employer may claim the federal exemption for that person under the Internal Revenue Code or 26 U.S.C. 7703. |
| Household or domestic workers | No | Housecleaning, yard work and similar aid and comfort for the household are exempt. Home health care and domiciliary care fall outside that definition and stay covered (MCA 39-71-116(15)). |
| Casual labor | No | Casual employment means work outside the usual course of the trade, business, profession or occupation of the employer (MCA 39-71-116(6)). An employer may elect to cover casual employees. |
| Agricultural and ranch workers | Yes | Montana has no general farm exemption. Hired farm and ranch employees are covered like anyone else. A narrow carve-out covers temporary agricultural work performed by someone who is already exempt (MCA 39-71-118(2)(d)). |
| Independent contractors | No, with a certificate | A person working under an independent contractor exemption certificate is exempt and has waived every benefit under the Act. Without a certificate or personal coverage, the hiring employer carries the risk. |
| Commission-only real estate, securities and insurance salespeople | No | Exempt when paid solely by commission with no guarantee of minimum earnings. |
| Direct sellers | No | Exempt using the federal definition at 26 U.S.C. 3508. |
| Newspaper carriers and freelance correspondents | No | Exempt only where the person, or a parent or guardian for a minor, has acknowledged in writing that the services are not covered. |
| Cosmetologists and barbers | No | Exempt under MCA 39-71-401(2)(l), which points to the unemployment insurance definition. |
| Ministers and members of religious orders | No | Exempt while performing the duties of the ministry or of the order. |
| Volunteers | No | A person serving in return for aid or sustenance only is exempt. MCA 39-71-118 pulls volunteer firefighters and people providing county ambulance services back in as employees, and any other ambulance service or nontransporting medical unit may elect to cover its volunteer emergency care providers. |
| Musicians and contact-sport athletes | No | A musician performing under a written contract and an athlete on a team or club in a contact sport are both exempt. |
| Temporary staffing workers | Yes | The temporary service contractor is the employer for premium and loss experience purposes (MCA 39-71-117(2)), so the agency insures them, not you. |
Note the anti-avoidance rule at MCA 39-71-401(5). Appointing an employee as a corporate officer, a partner, or an LLC member or manager for the purpose of exempting that person from coverage does not entitle them to the exemption. The exemptions describe genuine ownership and genuine roles, and the department reads them that way.
Agriculture deserves its own mention because so many states carve it out. Montana does not have a general farm or ranch exemption, so a hired hand on a farm or ranch is covered the same as any other employee.
Where the Policy Comes From
Montana is not a monopolistic state, so a government fund is not the only seller. You can buy from a private carrier or from the Montana State Fund, or you can self-insure with the department's permission. The statute calls these compensation plans No. 2, No. 3 and No. 1, and every employer picks one of the three.
For a small business, the practical choice is between Plan No. 2 and Plan No. 3. Self-insurance under Plan No. 1 requires proof of solvency to the department and to the guaranty fund, plus a security deposit of at least $250,000 for the first three years, which puts it out of reach for almost every small business.
The Montana State Fund is what makes the market work for new and high hazard businesses. Because MCA 39-71-2313(2) obliges it to insure any employer that asks, a two person framing crew that no private carrier wants still has a place to buy. That is a guaranteed market, not a monopoly, and pricing on the private side stays competitive because of it.
Whichever plan you land on, the premium is settled after the fact against actual payroll and actual job classifications.
Contractors and the Exemption Certificate
Montana settles the contractor question with a certificate rather than a debate. Under MCA 39-71-417, a person who regularly and customarily performs services at a location other than their own fixed business location must either elect to be bound personally by a compensation plan or apply to the department for an independent contractor exemption certificate.
The certificate is sworn. The applicant swears that they have been and will continue to be free from control or direction over the performance of their own services, both under contract and in fact, and that they are engaged in an independently established trade, occupation, profession or business, with documentation to prove it.
The application runs through the department's independent contractor program and carries a $125 non-refundable fee. Once issued, the certificate lasts two years unless suspended, revoked or canceled.
The penalties run both ways. A person who works as an independent contractor without a certificate or personal coverage faces department fines under MCA 39-71-419 of up to $1,000 for a first violation, up to $2,500 for a second, up to $5,000 for a third and $5,000 for each one after that.
The employer side is a pair of prohibitions. You may not coerce or mislead an employee into adopting independent contractor status to dodge coverage, and you may not exert so much control that the contractor is pushed out of compliance.
There is also a subcontractor trap in MCA 39-71-405. If you contract with an independent contractor for work that is a regular or recurrent part of your own trade or business, you are liable for benefits to that contractor's employees if the contractor has not properly complied with the coverage requirements.
The Sign on the Wall
Montana requires a posted sign and does not require a new hire pamphlet. MCA 39-71-401(6) directs each employer to post a sign informing employees about the employer's current provision of workers compensation insurance, at the locations in the workplace where notices to employees are normally posted.
The definition of workplace in that subsection is wider than an office. A workplace is any location where an employee performs any work-related act in the course of employment, temporary or permanent. It also includes a third party's place of business or property while you have access to or control over it for the purpose of carrying on your usual trade. For a crew that works on client sites, the sign travels.
The department provides the sign and distributes it through insurers or directly, which is why the state poster page tells employers to contact their workers compensation provider for the document. An employer who purposely or knowingly fails to post it is subject to a $50 fine for each citation.
Nothing in the statute requires you to hand a new employee a workers compensation booklet. I still put a one page summary in the onboarding packet, because the employee side of this system has a 30 day clock that most people never hear about until they miss it.
Injury Reporting Deadlines
Two clocks run at once, and they belong to different people. The employee has 30 days to tell you and 12 months to file a written claim. You have six days from notice to get the First Report of Injury to your insurer.
| Step | Who acts | Deadline | Authority |
|---|---|---|---|
| Tell the employer about the injury | Injured employee | 30 days after the accident | MCA 39-71-603. Actual knowledge held by a managing agent or superintendent counts as notice. |
| File the written claim | Injured employee | 12 months from the date of the accident | MCA 39-71-601. The insurer may waive the bar for up to 24 further months for lack of knowledge of disability, a latent injury or equitable estoppel. |
| File an occupational disease claim | Injured employee | 1 year from knowing the condition came from work | MCA 39-71-601, running from when the claimant knew or should have known. |
| Complete and send the First Report of Injury | Employer | 6 days after notice of the accident | Department of Labor and Industry First Report of Injury instructions. Send it inside the limit even if the worker is not available to sign. |
| File the first report with the department | Insurer | 30 days after the report reaches the insurer | ARM 24.29.4321. This one is the carrier’s job, not yours. |
| Accept or deny the claim | Insurer | 30 days after receipt | MCA 39-71-606, which also governs the notices sent to the claimant. |
| Notice before benefits are terminated | Insurer | 14 days | MCA 39-71-609. |
| Penalty for failing to file required reports | Employer or insurer | Assessed per offense | MCA 39-71-307: not less than $200 and not more than $500 for each offense. |
The six day figure comes from the department's own First Report of Injury instructions, which tell employers to complete the form within six days after notice of every on-the-job accident, injury or occupational disease and to send the original immediately to the insurer.
The same instructions say to send it inside the limit even if the injured worker is not available to sign, and to send it even where the employer questions whether the injury is job related.
MCA 39-71-307 puts a price on skipping the paperwork. An employer or insurer that refuses or neglects to submit the reports needed to properly file and review a claim is assessed a penalty of $200 to $500 for each offense. That is small money next to the claim itself, but a late first report is the kind of detail that colors everything an adjuster does afterward.
On the employee side, MCA 39-71-603 accepts something short of a formal notice: actual knowledge of the accident by the employer's managing agent or superintendent is equivalent to notice. If a supervisor watched it happen, the 30 day requirement is satisfied whether or not anyone filled out a form.
What the Wage Loss Benefit Pays
Temporary total disability, the benefit paid while an injured worker is completely off work and still healing, pays 66 and two-thirds percent of the wages the worker received at the time of the injury. MCA 39-71-701 caps the weekly benefit at the state average weekly wage in force on the date of injury, so a high earner is replaced at a much lower share than the percentage suggests.
Wage loss benefits do not start on day one. MCA 39-71-736 withholds compensation for the first 32 hours or four days of lost wages, whichever is less, which on a standard eight hour day makes the fifth day the first payable one. A worker totally disabled and unable to work in any capacity for 21 days or longer is then paid retroactively to the first day of total wage loss.
What Going Without Costs
An uninsured Montana employer can be billed up to double the premium it avoided, plus every dollar the Uninsured Employers Fund pays out in benefits to the injured worker. That fund runs the enforcement, and the department staffs field auditors around the state to find employers operating without coverage.
The numbers above come from MCA 39-71-503 through 39-71-515 and from the department's Uninsured Employers Fund program page, which describes the penalty as double the premium with a $200 minimum. The statute makes double the ceiling: up to double the Plan No. 3 premium, or $200 if that is greater.
One more consequence rarely gets mentioned until it matters. In a damages action brought by an injured employee, MCA 39-71-509 strips an uninsured employer of the three classic defenses: employee negligence unless it was willful, the negligence of a fellow employee, and assumption of risk.
The whole point of buying a policy is the exclusive remedy that comes with it: an injured worker generally takes benefits instead of suing you. An uninsured employer stands in court without that protection.
When Someone Gets Hurt
Work the sequence in order, and start the paperwork on day one rather than when the diagnosis firms up. Six days is not long, and the clock starts at notice, not at the point where you decide the claim is real.
Recordkeeping under federal law, which the Occupational Safety and Health Administration (OSHA) enforces, runs on a separate track from the state claim. Montana has no OSHA-approved state plan, so federal OSHA rules apply directly.
The Safety Program Attached to Coverage
Montana attaches a safety program duty to every employer through the Montana Safety Culture Act. MCA 39-71-1505 requires department rules obliging each employer to run an educational-based safety program: a new employee general safety orientation, job or task specific safety training, continuous refresher training including periodic safety meetings, periodic hazard assessment with corrective actions identified, and documentation that all of it happened.
Above five employees the bar rises. An employer of more than five employees must have a comprehensive and effective safety program that includes a safety committee of employee and employer representatives holding regularly scheduled meetings, written procedures for reporting and investigating all work-related incidents, accidents, injuries and illnesses, and policies assigning specific safety responsibilities and accountability.
The safety committee piece can be waived. A Plan No. 2 or Plan No. 3 insurer may waive it where the employer presents sufficient evidence of an effective written safety plan together with a satisfactory modification factor (the experience rating that adjusts your premium for your claims history) or a low incident record.
Insurers are also required to notify employers of the safety consultation services available to them, which is help that most small employers never ask for.
This is the part of the state scheme that overlaps with ordinary onboarding. The orientation, the task specific training and the documentation are all things a small team tends to do badly or not at all.
FirstHR is an onboarding and HR platform, not an insurer or a broker, and it does not sell coverage. What FirstHR holds is the record this scheme runs on: who started when, who acknowledged the safety orientation, who signed which policy, and which contractors have a current exemption certificate on file.
Frequently Asked Questions
How many employees before workers compensation is required in Montana?
One. Under MCA 39-71-401 the Workers’ Compensation Act reaches every Montana employer and every employee, so the moment a single person works for you under any hiring arrangement, spoken or on paper, you must choose Plan No. 1, 2 or 3. The state has never adopted a minimum headcount, which means no business is small enough to go uninsured safely. Part-time, seasonal and minor employees are counted too. So are workers another company supplies to you, unless that company keeps control over every aspect of the work. Whether a person needs coverage depends on who they are and what they do, never on how many people you employ.
Is Montana a monopolistic workers compensation state?
No. Montana runs a competitive market with three compensation plans. Plan No. 2 is a policy bought from any insurer authorized to sell workers compensation in Montana, Plan No. 3 is the Montana State Fund, and Plan No. 1 is self-insurance approved by the Department of Labor and Industry. The state fund exists as an option rather than a monopoly, and MCA 39-71-2313 describes it as a nonprofit, independent public corporation created to give employers a choice. Because private workers compensation policies are sold in Montana, employers here do not face the Employer’s Liability gap, meaning no built-in coverage for injury lawsuits against the employer, that arises in states where a government fund is the only seller.
Can a corporate officer be excluded from Montana workers compensation?
Yes, under conditions. MCA 39-71-401(2)(r) exempts an officer of a private or quasi-public corporation, and a manager of a manager-managed LLC, if the person neither does the ordinary duties of a worker nor is paid for them, or is engaged primarily in household employment for the entity, or owns 10 percent or more of the shares or membership interest, or is the spouse, child, parent, sibling or in-law of an owner who meets that 10 percent test. The exemption is optional: the company may elect to cover an otherwise exempt officer by written notice to its board and to its insurer. Appointing an employee as an officer purely to remove coverage does not create an exemption.
How fast must a Montana employer report a workplace injury?
Six days. Once you learn of a work accident, injury or occupational disease, the Department of Labor and Industry expects your First Report of Injury to be finished within six days, with the original going straight to your workers compensation insurer. Do not hold the form back because the injured worker cannot sign their section yet, and do not hold it back because you doubt the injury is job related; the department wants it filed either way. Your employees run on separate deadlines. They have 30 days to tell you about the accident under MCA 39-71-603 and 12 months from the accident to file a written claim under MCA 39-71-601.
What is the penalty for not carrying workers compensation in Montana?
The department may require an uninsured employer to pay the Uninsured Employers Fund up to double the premium it would have paid under Plan No. 3, or $200, whichever is greater, calculated on the past three years of payroll for the periods it was uninsured. A further $200 is collected if coverage is not obtained within 30 days of notice, and the fund recovers every dollar of benefits it pays to the injured worker. Late payments add a $50 fee and 12 percent annual interest. The department also orders uninsured employers to cease operations, and ignoring that order is a misdemeanor with each day a separate offense.
Does an independent contractor need coverage in Montana?
It depends on where they work. A contractor who routinely works away from their own fixed place of business needs one of two things: personal coverage under a compensation plan, or an independent contractor exemption certificate from the Department of Labor and Industry. Applying for the certificate costs $125 and is done under oath, with proof that the applicant is free from outside control over how the work is done and runs an independently established business. An approved certificate is good for two years. While it is in force the law conclusively treats the holder as an independent contractor, and the holder gives up every right and benefit the Act provides. Working with neither a certificate nor coverage can bring fines of up to $5,000 per violation under MCA 39-71-419.
Does Montana require a workers compensation pamphlet for new hires?
No. What Montana asks for is a sign on the wall, not a booklet in the new hire packet. Under MCA 39-71-401(6), every employer must display a notice telling staff that the business currently carries workers compensation insurance, placed at each workplace in the spot where employee notices usually go. The department supplies the sign and insurers pass it along, so the simplest route is to request one from your carrier. Purposely or knowingly failing to post it can bring a $50 fine per citation. The nearest Montana comes to a new hire handout rule is the Safety Culture Act, which requires new employees to receive a general safety orientation.