Under Arizona workers comp law, a contractor or restaurant hiring contractors for work in its own trade, and keeping supervision or control, may be treated as the employer of those crews under Arizona Revised Statutes 23-902. Working owners below 50% are employees, owners at 50% or more come in only by the carrier's written acceptance, and an independent sole proprietor may waive it.
Every Crew Deserves a Crown
Not sure how Arizona classifies your crew? Call and talk it through with a licensed broker.
These rules decide whose payroll ends up on an Arizona policy, for a restaurant group as much as a general contractor. The CA AZ NV workers comp differences page sets them beside the other two states.
| Rule | What It Says | Who It Reaches | Source |
|---|---|---|---|
| Statutory employer | Where a business keeps supervision or control and the work is part of its trade, contractors and subs doing it, and their employees, may be treated as its employees. | Contractors and restaurants | Arizona Revised Statutes 23-902 |
| Independent contractor | The statute sets a test for independent contractor status, and a written agreement creates a presumption that can be rebutted. | Contractors and restaurants | Arizona Revised Statutes 23-902 |
| Sole proprietor waiver | An independent sole proprietor may waive coverage on a form signed and dated by that person and by the hiring business's carrier. | Contractors | Arizona Revised Statutes 23-961 |
| Premium on alleged employees | A carrier needs written audit findings before charging premium on workers it treats as employees under the statutory employer or independent contractor rules. | Contractors | Arizona Revised Statutes 23-961 |
| Working owners under 50% | A working LLC member or working shareholder below the line is an employee. | Contractors and restaurants | Arizona Revised Statutes 23-901 |
| Owners at 50% or more | Deemed an employee only on written acceptance by endorsement, at the carrier's discretion; working partners and sole proprietors elect the same way. | Contractors and restaurants | Arizona Revised Statutes 23-901 |
| Employee rejection | An employee may reject coverage in writing before an injury. | Contractors and restaurants | Arizona Revised Statutes 23-906 |
Arizona Revised Statutes 23-902 is the rule GCs and trade contractors meet most. When you hire a sub for work that is part of your own trade and keep supervision or control over it, that sub and its employees may be treated as your employees. The facts of each job decide.
A written independent contractor agreement creates a presumption that can be rebutted, and a sole proprietor hired as an independent contractor can sign a waiver of coverage that your carrier also signs and dates. Arizona Revised Statutes 23-961 then limits the audit: premium on workers treated as your employees under those rules needs written audit findings first. The what happens if a subcontractor has no workers comp guide shows what an auditor looks for, and the workers comp certificate of insurance guide covers the paper to collect.
Arizona draws its owner line at 50%. Under that line, a member or shareholder who works day to day in the company is treated as an employee for workers comp. At 50% or more, the owner is deemed an employee only if the carrier accepts that in writing by endorsement, at its discretion. Working partners and sole proprietors come under coverage the same way, and the statute sets an assumed wage for a covered owner of at least $600 a month. The statute speaks of a working shareholder, not an officer, so title alone doesn't settle it.
Adding an owner at or above the line is something to settle with the carrier once you know what staying off means for benefits. The employee rejection rule doesn't reach owners: it lets an employee reject coverage in writing before an injury and doesn't address officers or owners. The full rules, with the waiver and the endorsement, are in Arizona sole proprietor workers comp waiver.
Restaurant and brewery owners meet the same two rules first: the 50% line for members and shareholders who work the floor or the kitchen, and the statutory employer rule for outside labor doing work that is part of the business. A contractor remodeling the kitchen may be doing work outside a restaurant's own trade; the facts of each arrangement decide. How Arizona counts tips and staff meals in payroll isn't covered here, so ask the carrier. The kitchen and server workers comp guide explains why payroll by role matters.
Arizona uses NCCI classifications, and the carrier determines which ones apply from the work each person actually does. There is no official public Arizona class list this site can point to, so we don't publish Arizona codes. California's WCIRB codes don't carry over. If you have a current Arizona policy, its declarations show the codes in use today. The workers comp class code lookup page explains which lists each state publishes. For looking a code up and asking for review, see Arizona workers comp class codes.
On July 28, 2026, NCCI filed a proposed decrease of 0.2% for the voluntary and assigned risk markets, effective January 1, 2027. It stays a proposal until the Department of Insurance and Financial Institutions acts; we found no decision at review. The change that took effect at the start of 2026 was also a decrease. Your premium still depends on your classifications, payroll, experience and the carrier's rates. Follow each state's actions on the workers comp rate changes California Arizona Nevada page. When you're ready, get an Arizona workers comp quote.
Arizona audits look hard at who counts as your employee. Before renewal, gather the records that answer that question and the payroll that drives the premium.
Workers comp follows Arizona rules statewide, but payroll follows local pay. Each metro page below lists its cities by county with their ZIP codes, shows local trade pay as payroll context, and links the permit offices, projects and restaurant districts that bring work to the area.
Each trade hub covers Arizona beside California and Nevada: the license class where verified, the statutory employer rule as it plays out in that trade, and what moves its premium. Start from workers comp for contractors by trade or hospitality workers comp, or go straight to a trade.
Each trade also has its own Arizona page with its ROC license class, the owner rules and what an auditor asks for:
Send your trade, state and payroll, and a broker reviews the request. If you would rather talk first, leave a number.
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You may be. Under Arizona Revised Statutes 23-902, if the sub's work is part of your trade and you keep supervision or control over it, the sub and its employees can be treated as yours. Before premium is charged for them, the carrier needs written audit findings, so keep the sub's certificate or signed waiver on file.
Not automatically. A working member at 50% or more is deemed an employee only if the carrier accepts that in writing by endorsement, and the carrier decides whether to. A working member below the line is an employee. Settle how each owner is treated with the carrier before the policy starts.
Arizona Revised Statutes 23-906 lets an employee reject coverage in writing before an injury. It is the employee's choice, not the employer's, and it says nothing about officers or owners, who follow the separate ownership rules.
Arizona Revised Statutes 23-961 allows the waiver when the sole proprietor you hire works as an independent contractor, and the waiver needs the signature and date of both that sole proprietor and your carrier. Ask your carrier for its form and keep a signed copy for each job, since the auditor may ask for it.
NCCI has proposed a decrease of 0.2% effective January 1, 2027, and it remains proposed until the Department of Insurance and Financial Institutions acts. Even if adopted, your own premium depends on your classifications, payroll, claims and the carrier's rates.
Keep a certificate and a written agreement on file for every sub before work starts, with payment records that match. Arizona law can treat a sub's crew as your employees in some situations, so the auditor will ask. Monthly payroll reporting, where offered, can also keep premium closer to actual payroll.
6 official sources, every one checked
Reviewed by David Gleason, Principal, on .
Next Level Experience. Insurance Done Right.
Arizona workers comp for contractors and restaurants, from statutory employers to owners.
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