I Own an Arizona Corporation: Need Comp?

An Arizona corporation is the employer, and whether its officers are covered turns on how much of the company each one owns. A shareholder-officer who owns less than 50 percent is a covered employee automatically, while one who owns 50 percent or more is left out unless the insurer adds them by endorsement; either way, if the corporation has any employees it must carry workers compensation.

Who this is for: Owners of an Arizona C-corp or S-corp, whether it is a small closely held company with only officers or a corporation with a full payroll.

The short version

Any employee means a policy is required (A.R.S. section 23-961), from the first regularly employed worker.
Officers under 50 percent are covered by default. A shareholder-officer who owns less than half is a covered employee automatically.
Officers at 50 percent or more are out by default. A shareholder-officer who owns half or more is not covered unless they elect in by endorsement.
Election runs through the insurer. There is no state exemption certificate; inclusion for a majority owner is added to the policy by endorsement.
Non-owner employees are always covered from their first day once the corporation has any regularly employed worker.

How officers are treated

Because the corporation is a separate legal person, it is the employer and its officers are potential employees of it. Arizona then splits officers by ownership share. A shareholder-officer who owns less than 50 percent is treated as a covered employee automatically, so their own on-the-job injuries are paid without any election. A shareholder-officer who owns 50 percent or more is not a covered employee by default; if that owner wants coverage on their own injuries, the insurer has to accept them by endorsement, at the carrier's discretion. So a solo founder who owns 100 percent of an S-corp is out unless they elect in, while a minority officer with a 10 percent stake is covered from the start.

What applies to your corporation

Your corporation	Is comp required?	Officer and employee notes
Solo owner-officer, 100 percent, no other staff	Usually no	The owner is out by default; may elect in by endorsement
Two officers at 50/50, no other staff	Usually no	Both are 50 percent owners, out unless each elects in
Majority owner plus a minority officer under 50 percent	Yes, for the minority officer	The minority officer is covered automatically; the majority owner elects in if wanted
Officers plus any non-owner employees	Yes	Employees covered from day one; officers follow the 50 percent rule

Deciding whether officers go on the policy

For a majority owner, adding yourself means your own work injuries are paid by comp; staying out keeps that owner off the premium but leaves them to rely on their own health and disability coverage for a work injury. For a minority officer, the choice is largely made for you, since Arizona already treats you as a covered employee. Many small corporations put rank-and-file employees on the policy, cover the hands-on minority officers automatically, and then decide case by case whether the majority owner elects in. An owner who works on a shop floor or a job site is exactly the kind of person who benefits from being on the policy.

A Chandler example

Illustrative, not a quote. A Chandler manufacturer is an S-corp with one majority owner-officer who holds 70 percent and a minority officer who holds 30 percent, plus four production employees. With employees on the payroll, the corporation needs a policy, and all four workers are covered from day one. The 30 percent officer is a covered employee automatically, while the 70 percent owner elects in by endorsement so a shop-floor injury is paid by comp. When a distributor asks for proof of coverage before shipping, the company already has a certificate. See our workers comp for manufacturers page.

Real questions Arizona owners ask

Does my Arizona corporation need workers comp?

If it has any employees, yes, from the first regularly employed worker. Whether the officers themselves are covered depends on ownership share, but non-owner employees must always be covered.

Are corporate officers covered by default in Arizona?

Only if they own less than 50 percent. A shareholder-officer under half is a covered employee automatically, while one who owns 50 percent or more is out unless they elect in by endorsement.

How does a majority owner-officer get covered in Arizona?

By electing in through a carrier endorsement, at the insurer's discretion. There is no state exemption certificate; a 50 percent or greater owner is added to the policy rather than covered automatically.

We are two officers who own the company 50/50. Do we need a policy?

Usually not by state law if there are no other employees, because both are 50 percent owners who are out by default. Either officer can elect in, and any non-owner hire would make a policy required.

Is a minority officer really covered without electing in?

Yes. Arizona treats a shareholder-officer who owns less than 50 percent as a covered employee automatically, so their own work injuries are on the policy without a separate election.

Do I still have to cover employees if the owner-officer is out?

Yes. The officer rules only decide whether the owners are on the policy. Every non-owner employee must be covered from their first day once the corporation has a regularly employed worker.

Should a working owner-officer go on the policy?

Usually yes if they do hands-on work, since comp then pays their work injuries. An owner who only manages from a desk more often stays off, relying on their own health and disability coverage.

Why Arizona owners choose Morrow

We shop the right market for you. Arizona has no state fund, so you buy workers comp from private insurers on the open market, and we compare several to find your best rate. If your work is hard to place and no insurer will take you, a guaranteed state backstop (the NCCI-run assigned risk plan) will still cover you.
We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.

Related Arizona guides

Every Arizona business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.

This guide is general information, not legal advice. Arizona rules and penalty amounts can change, so verify current requirements with the Industrial Commission of Arizona or a licensed advisor before you rely on them. Last updated: July 2026.