In an Arizona partnership the working partners are not employees by default, so you are not required to cover the partners themselves, but once the business has even one regularly employed worker it must carry workers compensation for that worker. Partners who actively work in the business can be added to the policy by carrier endorsement, at the insurer's discretion.
Who this is for: Arizona general partnerships and their partners, from a two-person shop with no staff to a partnership running a payroll.
The short version
- Partners are not employees by default. Arizona treats working partners like sole proprietors, so you owe no coverage on the partners themselves.
- The first employee is the trigger. A policy becomes mandatory once the partnership has one regularly employed worker (A.R.S. section 23-961).
- Partners can elect in. A working partner can be added to the policy by endorsement, using an assumed wage the statute sets between a floor and the state maximum.
- Election runs through the insurer. There is no state exemption certificate; a partner is included on the policy by endorsement, not a filing with the state.
- Employees always get covered from their first day once the partnership has any regularly employed worker.
Partners versus employees
Arizona counts your employees, not the partners, when deciding whether a policy is mandatory.
| Situation | Coverage on the partners | Coverage on employees |
|---|---|---|
| Two partners, no employees | Not required; partners may elect in by endorsement | None to cover |
| Partners plus one or more employees | Not required; partners may elect in by endorsement | Required from day one |
| A partner elects in | Covered under the policy at the assumed wage | Covered from their first day |
| Partners keep themselves off the policy | Out; rely on their own health and disability | Still required if you have employees |
Why partners often elect in
Partners who do real work in the business carry the same injury risk as any employee, but their own health plan may refuse a work-related injury. Adding a partner to the policy means comp pays that partner's medical bills and part of their lost income after an on-the-job injury. It matters most for hands-on trades and firms with client contracts that ask for proof of coverage. Because partners are out by default, adding them is a deliberate coverage choice made through a carrier endorsement, and we can quote the partnership with and without the partners included so you can compare.
What changes as you hire
The partnership crosses into a required policy the moment its regular staffing reaches one employee, and coverage attaches from that worker's first day. Part-time and seasonal staff count, and so do farm and ranch workers, since Arizona has no agricultural exemption. Below any employees the partnership is not required to carry, but it also has no comp to fall back on if a partner is hurt, so many partnerships insure earlier than the strict rule demands.
A Tempe example
Illustrative, not a quote. Two partners run an accounting practice in Tempe and hire one seasonal preparer for tax season. That single regular seasonal employee makes a policy mandatory during the season, effective from the preparer's first day. The partners are not required to cover themselves, but one who visits client sites elects in by endorsement so a slip on a client stairwell would be covered. When a corporate client asks for proof of coverage, the firm has a certificate ready. See our workers comp for accounting firms page.
Real questions Arizona owners ask
Does an Arizona partnership need workers comp?
For the partners, no, they are not employees by default. For employees, yes, once the partnership has even one regularly employed worker. With no employees the state does not require a policy.
Are partners covered automatically in Arizona?
No. Arizona treats working partners like sole proprietors, so they are out by default. A working partner can be added to the policy by a carrier endorsement, at the insurer's discretion.
How many employees before our partnership needs a policy?
One. A policy becomes mandatory once the partnership has one regularly employed worker under A.R.S. section 23-961. Part-time, seasonal, and farm workers all count.
Can a partner get covered under the policy?
Yes. A partner who actively works in the business can elect in by endorsement to include their own injuries, using an assumed wage the statute sets. It is a coverage choice, not a requirement.
Do we count the partners toward the coverage requirement?
The partners themselves do not create the duty, since they are not employees by default. The requirement is triggered by your actual employees, even a single regularly employed worker.
A client wants proof of coverage but we have no employees. What now?
You can buy a policy and elect the partners in to produce proof of coverage. The state does not require it with no employees, but a client or general contractor contract can, and we can price it.
What if a partner is hurt and never elected in?
There is no comp coverage on that partner, so they absorb their own medical bills and lost income. Electing in by endorsement ahead of time is what avoids that, especially in the trades.
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.
- Business insurance in Arizona (start here)
- Workers comp: the owner's overview
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Do sole proprietors need workers comp?
- Hiring your first employee: what changes
- Arizona accounting firm workers comp
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.