According to Nevada workers' compensation requirements, which of the following contractors is exempt from carrying workers' compensation insurance?
Correct Answer
C) An LLC with 2 members and no employees
An LLC with only members and no employees is exempt from Nevada workers' compensation requirements, as members are considered owners, not employees.
Why This Is the Correct Answer
An LLC with 2 members and no other employees is exempt from Nevada workers' compensation requirements. Nevada law treats LLC members as owners rather than employees. Since there are no employees (only member-owners), the coverage mandate does not apply. Once the LLC hires any actual employees, coverage becomes mandatory.
Why the Other Options Are Wrong
Option A: A partnership with 3 partners and 1 employee
A partnership with 3 partners and 1 employee is not exempt. The presence of 1 employee — regardless of how many partners there are — triggers the mandatory workers' compensation coverage requirement in Nevada. The employee must be covered.
Option B: A sole proprietor with 2 employees
A sole proprietor with 2 employees is not exempt. A sole proprietor with no employees may be exempt, but the moment even one employee is hired, Nevada workers' compensation coverage becomes mandatory. Two employees clearly requires coverage.
Option D: A corporation with the owner as the only worker
A corporation with the owner as the only worker is not automatically exempt in Nevada. Corporate officers are generally considered employees of the corporation. While there may be mechanisms for a corporate officer to elect out of coverage, a corporation with an owner-worker does not receive the same automatic exemption as an LLC with only members.
Memory Technique
The rule: Members ≠ Employees. An LLC's members are owners, not workers under the WC law, so no members = no employees = no coverage required. Think 'LLC with Only Members = Owners Only = No Mandatory Coverage.' Add one real employee and the exemption vanishes.
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