A Michigan nonprofit follows the same workers' comp rule as any other employer: once it meets the state's test (3 or more people working at one time, or one person working 35 or more hours a week for 13 weeks or longer; MCL 418.115), it must carry coverage. Being a 501(c)(3) does not exempt you, and paid staff count the same way they would at a for-profit. So the question is not whether you are a nonprofit, but how many paid people work for you and how many hours they work.
Who this is for: Michigan nonprofit directors, boards, and operators with paid staff or regular volunteers.
The short version
- Nonprofit status does not exempt you; the same 3-at-one-time or 35-hours-for-13-weeks test applies.
- Paid part-time employees count toward the 3-person test.
- Volunteers are generally not employees, but paid stipends or required hours can blur that line, so check how your people are actually treated.
- Executive directors and other paid staff are employees and must be covered once you cross a trigger.
- Going uninsured strips the nonprofit of the legal protection comp provides and exposes it to a direct injury lawsuit.
How the rule applies to nonprofits
Michigan's coverage test does not carve out charities. If your nonprofit has 3 or more people working at one time, or a single employee working 35 or more hours a week for 13 weeks or longer, you must carry workers' comp, exactly like a business. Paid part-time staff count toward the 3-person number. A paid executive director is an employee. What usually decides it for a small nonprofit is the mix of paid staff and hours, not the mission or the tax status.
| Your nonprofit setup | Is comp required? | What to know |
|---|---|---|
| 3 or more paid people working at one time | Yes | Crosses the headcount trigger; part-time paid staff count |
| One paid director at 35+ hours for 13+ weeks | Yes | Meets the single-employee hours trigger |
| All-volunteer, no paid staff | Usually no | True volunteers are generally not employees, but watch stipends and required hours |
| A few paid staff plus volunteers | Depends on the paid count | Count the paid people against the triggers; a policy can still cover volunteers if you choose |
Volunteers, stipends, and gray areas
The place nonprofits get tripped up is the volunteer line. A genuine volunteer who is not paid is generally not an employee and does not count. But once you pay a stipend, guarantee hours, or treat someone like staff, they can start to look like a paid worker, and Michigan decides employee status by the real relationship, not the title. If you rely on people who sit near that line, it is worth confirming how they would be classified before you assume you are under the trigger. Many nonprofits also choose to add volunteers to a policy for peace of mind, even where the law would not force it.
An Ann Arbor example
Illustrative, not a quote. An Ann Arbor community nonprofit employs a part-time program director, a part-time coordinator, and a part-time bookkeeper, and on most weekdays all three are working at once. That is three paid people at one time, so Michigan requires a policy, even though the group runs on grants and no one is full time. We place coverage, rate the clerical and program payroll correctly, and review whether the regular volunteers should be added too. See our workers comp for nonprofits page.
Real questions Michigan owners ask
Does a Michigan nonprofit need workers comp?
Once it meets the test, yes. A nonprofit must carry coverage when it has 3 paid people working at one time or one paid worker at 35 or more hours a week for 13 weeks. Tax-exempt status does not change this.
Do volunteers count toward the coverage test?
Generally no. True unpaid volunteers are usually not employees and do not count. But stipends, guaranteed hours, or staff-like treatment can change that, since Michigan looks at the real relationship.
Is our executive director an employee for workers comp?
If paid, yes. A paid executive director is treated as an employee and counts toward the coverage test, and must be covered once the nonprofit crosses a trigger.
Do part-time paid staff count for a nonprofit?
Yes. Paid part-time employees count toward the 3-people-at-one-time trigger, so three part-timers working together can require a policy even with no full-time staff.
Can we cover our volunteers even if the law does not require it?
Yes. Many nonprofits choose to add regular volunteers to a policy for protection, even where the state would not count them as employees. We can quote that option.
What happens if our nonprofit skips required coverage?
The same penalties apply as for a business. Going uninsured is a misdemeanor with daily exposure, and the nonprofit loses the legal shield that keeps an injured worker from suing it directly.
Why Michigan owners choose Morrow
- We shop the right market for you. In Michigan you buy workers' comp on the open market from any private carrier licensed in the state, because Michigan has no state fund; if no carrier will take you, the Michigan Workers' Compensation Placement Facility (the assigned-risk plan) is the guaranteed fallback, so we can shop your rate freely and still keep a backstop for hard-to-place work.
- 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 Michigan guides
Every Michigan 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 Michigan (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 partnership: 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)
- Hiring your first employee: what changes
- What workers comp does not cover
- Michigan nonprofit workers comp
This guide is general information, not legal advice. Michigan rules and penalty amounts can change, so verify current requirements with the Michigan Workers' Disability Compensation Agency (WDCA) or a licensed advisor before you rely on them. Last updated: July 2026.