Buying workers’ compensation for:


State Fund: No

Insurance Coverage Requirements: Workers’ Compensation is compulsory in Minnesota, waivers are not permitted.

Who is Required to Purchase Workers’ Compensation Coverage?

All employers are required to either purchase workers’ compensation insurance to provide benefits to their employees for work-related injuries or obtain approval from the Minnesota Department of Commerce permitting self-insurance upon proof of the employer’s financial ability to do so. There is no minimum number of employees an employer must have before insurance is required; therefore, an employer with only one part-time employee generally must provide coverage.

Employers are generally defined as those who hire others to perform services. Employees are generally defined as persons performing services for another for hire including minors and workers who are not citizens.

Some entities, if they have no employees are not employers so they have no one to insure:

Sole Proprietorships: Individually or family run, non-incorporated businesses owned by one person including true independent contractors, where any employees are immediate family members (a spouse, parent or child, regardless of age). Note: Once a non-immediate family member is hired, insurance is required.

Partnerships: Partners in business or farm operations where each person is a partner or a spouse, parent or child of a partner, regardless of age.

Factors that Impact Coverage

  • You are a sole proprietor: In Minnesota, you and immediate family members can choose not to carry workers’ compensation if there aren’t any other employees.
  • You are a partner: In Minnesota, you are excluded from coverage if all employees are partners or immediate family, but you have the option to include yourself.
  • You are a corporate officer or member of an LLC: You are exempt from coverage if all employees are corporate officers, members or immediate family, but you have the option to include yourself.

Failure to Secure Compensation

The employee may elect to sue the employer for the injury in a civil action for the full extent of the employee’s losses. The amount awarded in such a case may be considerably higher than the amount of workers’ compensation benefits due. Where the employer fails to purchase workers’ compensation insurance, it may not defend a civil personal injury lawsuit by claiming the usual common law defenses (such as assumption of risk) unless it can prove that the employee was willfully negligent.

In addition to other liability, an uninsured employer may also be fined by the department for failing to insure employees, regardless of whether an injury has occurred. The employer may be ordered to provide the necessary insurance coverage, to refrain from employing any person at any time without insuring the employee and to pay a penalty of up to $1,000 per employee per week during the time the employee was not insured.


Minnesota Statutes 176.181 gives the commissioner of the Department of Labor and Industry the authority to enforce the mandatory coverage laws. Minnesota Statutes 176.184 is one of the provisions detailing the commissioner’s powers of enforcement. These include the ability to enter and inspect a business and its records, take depositions, issue subpoenas and order the production of documents to determine if insurance coverage as required by law exists. If the inquiry reveals inadequate or nonexistent coverage, the commissioner’s representative will continue the investigation and determine what action, if any, is appropriate.

Proof of Coverage is Required

All employers required or electing to carry workers’ compensation coverage in the state of Minnesota must post and display in a conspicuous location a notice, "Minnesota Workers’ Compensation Employee Rights and Responsibilities", advising employees of their rights and obligations, assistance available to them, and the operation of the workers’ compensation system, the name and address of the workers’ compensation carrier insuring them or the fact that the employer is self-insured.

The notice must be displayed at all locations where the employer is engaged in business.

The commissioner may assess a penalty of $500 against the employer if, after notice from the commissioner, the employer violates the posting requirement.

Independent Contractors

Mistakenly classifying an employee as an independent contractor can result in significant fines and penalties.

View 20 factors used by the IRS and our independent contractor questionnaire to determine whether you have enough control over a worker to be an employer.

Key Resources

Other Tips

If your insured employs workers in multiple states or your insured’s employees are temporarily working out-of-state, they need to purchase insurance for all the states where their workers are located, according to each state’s laws. Call 1-800-476-2948 and let us walk you through it.

The nature of your insured’s business, number of employees being covered and past coverage and claims are all factors in how much their premium will cost.