A small Michigan restaurant may begin with an owner and two part-time employees. Then one person starts covering prep, lunch and closing shifts. A few weeks later, a third worker joins the Saturday schedule.
Which change creates a workers’ compensation requirement—the longer hours or the third person?
Potentially either one. Michigan uses separate tests for the number of employees working at one time and the hours one employee works over a defined period. Business structure can add another layer.
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Quick Answer: When Does a Michigan Restaurant Need Workers’ Comp?
Michigan restaurants generally need workers’ compensation when they regularly employ three or more people at one time, including part-time workers. A private employer with fewer than three employees may also fall under the requirement when at least one employee has regularly worked 35 or more hours per week for 13 weeks or longer during the preceding 52 weeks.
The tests come from Michigan Compiled Laws §418.115. Entity structure and properly filed owner exclusions can also affect the answer. For coverage basics, see StarNet’s workers’ comp guide for restaurants.
Michigan Workers’ Comp Triggers at a Glance
Staffing pattern | General Michigan result | What to review |
|---|---|---|
One employee works 20 hours each week | The general 35-hour threshold is not met on these facts | Entity structure, exclusions and schedule growth |
One employee works at least 35 hours for 13 weeks during the preceding 52 weeks | Coverage is generally required | Actual weekly hours and qualifying weeks |
Two employees both work fewer than 35 hours | The two main staffing thresholds may not be met | Owner status, entity rules and outside labor |
Three part-time employees regularly work at one time | Coverage is generally required | Part-time status does not remove them from the count |
Four people are on payroll but never three work together | Payroll headcount alone does not answer the question | Whether three are regularly employed “at one time” and whether anyone meets the hours test |
Sole proprietor with no employees | The owner is not an employee of the sole proprietorship | The owner generally cannot obtain workers’ comp benefits through a policy issued to the sole proprietorship |
This table is for planning, not a legal determination. Ownership, worker status, entity type, subcontractors and valid exclusion documents can change the result.
The Three-Employee Test
The Michigan Workers’ Disability Compensation Agency says private employers regularly employing three or more employees at one time must carry workers’ compensation insurance. Part-time employees are included.
Three people may each work only one dinner shift per week, but they still count if the restaurant regularly employs them together. They do not each need to reach 35 hours. Conversely, four names on payroll do not automatically prove that three employees regularly work at one time; the actual schedule matters.
The 35-Hour and 13-Week Test
Michigan law provides another route into the requirement for a private employer that regularly employs fewer than three people.
Coverage is generally required when at least one employee has been regularly employed by the same employer for 35 or more hours per week for 13 weeks or longer during the preceding 52 weeks.
The 52-week lookback matters. A cook may have worked 37 hours weekly during the summer and later returned to fewer hours. Those earlier weeks may still count. Keep weekly records that include prep, training, meetings, split shifts, overtime and closing duties.
Why Part-Time Schedules Can Be Misleading
Restaurant A has one cook working 38 hours each week. After 13 qualifying weeks, the hours test may apply. Restaurant B regularly schedules three people together for one 12-hour dinner shift; the headcount test may apply even though nobody approaches 35 hours.
A patio opening, holiday schedule or staffing shortage can change either calculation. Review the schedule before the rush rather than after an injury or audit.
Do Restaurant Owners and Managers Count?
The state says a partner is considered an employee of the partnership, a corporate officer is considered an employee of the corporation, and an LLC member who is also a manager is considered an employee of the LLC. A sole proprietor working in the sole proprietorship is not an employee of that business.
Michigan’s Employer Insurance Requirements publication explains that corporations, LLCs and partnerships generally need a policy or a properly filed WC-337 Notice of Exclusion. An exclusion is not created merely by leaving an owner off payroll, and using employees or subcontractors may require a policy. Provide the agent with the entity type, ownership roles, employee roster and filed exclusions.
Independent Contractors and Outside Labor
Calling someone a contractor does not decide the issue. Michigan’s employer FAQ says a worker may be considered an employee when the person does not maintain a separate business, offer services to the public or employ other workers.
This can affect a regular cleaner, prep cook or maintenance person. For a genuine outside business, keep the contract, invoices and evidence of insurance. StarNet’s workers’ comp audit guide explains why outside-labor records may be requested.
A Practical Staffing Review
Once a month—and before seasonal hiring—review:
How many people are regularly employed at one time?
Has anyone worked 35 or more hours in a week?
How many qualifying weeks fall within the preceding 52 weeks?
Are partners, corporate officers or LLC member-managers treated as employees?
Are owner exclusions properly filed?
Is outside labor independent and documented?
Do payroll, timekeeping and the insurance application agree?
Review again after adding a location, catering or delivery. If the restaurant falls below the thresholds, ask whether voluntary coverage is appropriate for its employees. That is different from trying to insure a sole proprietor as an employee of the sole proprietorship.
Frequently Asked Questions
Do three part-time employees trigger Michigan workers’ comp?
Generally, yes, when the restaurant regularly employs all three at one time. They do not each need to work 35 hours.
Does one full-time employee require coverage?
Generally, yes, when that employee has been regularly employed for at least 35 hours per week for 13 weeks or longer during the preceding 52 weeks.
Must the 13 weeks be the most recent 13 weeks?
No. The law uses a preceding 52-week lookback. Review the employee’s weekly hours across that period rather than only the current schedule.
Does a sole proprietor count as an employee?
No. The owner is self-employed, not an employee of that business, and generally cannot receive workers’ comp benefits through a policy issued to the sole proprietorship.
Can an owner simply choose to be excluded?
Not automatically. Eligibility depends on the entity and ownership, and an appropriate exclusion form may need to be filed with the state.
Can a small restaurant obtain coverage before the staffing threshold applies?
Michigan permits voluntary assumption of workers’ compensation liability for employees. Ask how this applies to the entity; it does not mean a sole proprietor can cover himself or herself as an employee of the sole proprietorship.
Contact StarNet Insurance Group
Michigan’s rule is not only an employee-count test and not only an hours test. The restaurant’s schedule, legal entity, ownership and use of outside labor all need to fit the insurance arrangement.
Coverage varies by insurer, policy, endorsement, classification and individual risk. State rules can change, and worker status depends on the facts. This article provides general educational information and is not legal, payroll or coverage advice.
Contact StarNet Insurance Group to review Michigan restaurant workers’ compensation, employee hours, ownership and staffing changes before they create a coverage or compliance gap.
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