Who needs workers' compensation coverage?

Minnesota Workers' Compensation law states all employers are required to purchase workers' compensation insurance or become self-insured. This is often referred to as "mandatory coverage." Employers are generally defined as those that hire another to perform services. Employees are generally defined as people performing services for another, for hire, including minors and workers who are not citizens

Fines for failure to insure
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.

Other penalties and consequences
An employer has 10 days to comply with or contest a department order concerning insurance coverage. If an objection is not received by the commissioner, the order is considered final and cannot be appealed. If the employer contests the order, the matter will be referred to a workers' compensation judge for a decision as to whether the fine or other terms of the order are justified. If the employer loses, the judge may order the employer to pay additional penalties if uninsured persons were employed while the case was pending.

New online insurance lookup

Click on the graphic to use the online insurance verification tool. This tool is designed to allow users to verify workers’ compensation insurance coverage for employers, based on proof of coverage data filed with DLI.

How do I obtain workers' compensation insurance?

The Minnesota Workers' Compensation Law states that all employers are required to purchase workers' compensation insurance or become self-insured.

Workers' compensation insurance in Minnesota may be purchased through CCI Underwriters, Inc. Although some states (North Dakota is an example) provide workers' compensation insurance directly to employers, Minnesota and most other states do not. You should contact CCI Underwriters, Inc we deal in commercial or business insurance and can help you to obtain a workers’ compensation insurance policy to cover your employees.

If you are not able to obtain insurance in the voluntary market, assigned risk plan coverage (sometimes referred to as “assigned risk pool” insurance) can be obtained with the assistance of CCI Underwriters, Inc.

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

1. 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:  After a non-immediate family member is hired, insurance is required.
    
2. Partnerships:  Partners in business or farm operations where every employee is a partner or a spouse, parent or child of a partner, regardless of age. Please refer to the Definition page.

Other categories of employment are excluded from the workers' compensation coverage requirement:

1. Closely held corporations:  Executive officers owning 25 percent of more of a closely held corporation or a spouse, parent or child of the executive officer, regardless of age, are automatically excluded unless the business elects to cover them. To qualify for this exemption, such corporations must have 10 or fewer shareholders and less than 22,880 hours of payroll in the preceding calendar year.
   
   Employees of such a corporation who are more distantly related by blood or marriage to an executive officer of the corporation may also be excluded by filing a written request to be excluded. This includes brothers, sisters, aunts, uncles, grandparents and grandchildren. Cousins may not be excluded from coverage. For further information, please refer to our information sheet Corporations.
    
2. Limited liability companies:  There are exclusions for managers and members of their families here that are similar to the exclusions for closely held corporations.
    
3. Family farm operations:  People employed by a family farm that pays or is obligated to pay cash wages in the preceding calendar year of less than the current coverage threshold. The threshold is $8,000 unless the operation has $300,000 in total liability insurance coverage and $5,000 in medical insurance coverage for farm laborers. Where the $300,000 insurance coverage threshold is met, the farm operation may pay up to the statewide average annual wage (about $26,000 in 1995) in total payroll to farm laborers in the previous year before workers' compensation insurance coverage is required. The farmer-employer's immediate family members, farmers or their family members exchanging work within the community and their employees are also exempted from coverage. Executive officers of a family farm corporation are excluded. For further information, please refer to our information sheet The Farmer-Employer Exception.
    
4. Casual employees:  An employee who is not working in the usual course of the trade, business, profession or occupation of the employer and both the employee and employer understand that the employment is meant to be for one time or infrequent rather than permanent or periodically regular.
    
5. Household workers:  This includes a domestic, repairer, groundskeeper or maintenance worker at a private household, who earns less than $1,000 cash during a quarter of the year unless more than $1,000 was earned in any quarter of the previous year.
    
6. Other exclusions:  Veterans organization officers and members attending meetings and conventions; nonprofit associations with a total annual payroll for all employees of less than $1,000 and people covered under the Domestic Volunteer Service Act of 1973 (Vista volunteers, foster grandparents).

  Election of coverage
The Minnesota Workers' Compensation Act provides that insurance coverage may be purchased for many of the above named classes of persons. When such coverage is provided, the insured person becomes an "employee" as defined within the statute. When coverage is elected, written notice must be provided to the insurer and becomes effective the day following receipt of the notice or at a later date requested in the notice.

An employer contracting with an independent contractor may also provide insurance for that entity. The provider of the insurance may only charge the independent contractor a fee for the coverage if the independent contractor elects in writing to be covered and is issued an endorsement setting forth the terms of the coverage, the names of the persons covered, the fee charged and how the fee is calculated.

Hiring an "Uninsured Subcontractor" "Independent Contractor" poses a significant liability.