Minnesota Workers Compensation Insurance

Minnesota Workers Compensation law states that all employers are required to purchase workers compensation insurance or become self-insured. This is often referred to as "mandatory coverage." Employees are generally defined as people performing services for another, for hire, including minors and workers who are not citizens. An employer having only one part-time employee must supply coverage, there is no minimum.

Sole Proprietors are not required to carry workers compensation insurance. However, once a non-immediate family member is hired, workers compensation insurance is required. Employers are exempt as specified in Minnesota Statutes. Follow the link below to view the Statutes related to exemptions from workers compensation insurance coverage.

• Maintains a separate business with the independent contractor's own office, equipment, materials and other facilities
• Holds or has applied for a federal employer identification number, or has filed business or self-employment income tax returns with the IRS based on that work in the previous year
• Operates under contracts to perform specific services or work for specific amounts of money and under which the independent contractor controls the means of performing the services or work
• Incurs the main expenses related to the service or work that the independent contractor performs under contract
• Is responsible for the satisfactory completion of work or services that the independent contractor contracts to perform and is liable for a failure to complete the work or service
• Receives compensation for work or service performed under a contract on a commission or per job or competitive bid basis and not on any other basis
• May realize a profit or suffer a loss under contracts to perform work or service
• Has continuing or recurring business liabilities or obligations
• The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures.

If an employee is injured and the employer has not acquired coverage or established self-insurance, the state Special Compensation Fund may pay for the employee’s benefits. This will be determined by a compensation judge. The employer will then be required to repay the Special Compensation Fund and include a penalty that is 65 percent of the benefits. The employee also has the right to sue the employer for the injury in civil court for their losses. This amount can be much higher than that of the original benefits paid.

Any uninsured employer can be fined by the department for failing to provide coverage even without any injury having taken place. The employer can then be forced to provide coverage and be kept from employing any person until they can confirm coverage. They may also incur a penalty of up to $1,000 per employee a week during the period of lapse in coverage. The employer found without coverage will be given 10 days to meet the terms or contest the order with the department. Failure to submit objection of the order is then considered final and cannot be subject to appeal.