Do businesses need workers compensation insurance before hiring?

Workers Compensation Insurance Requirements in Minnesota Before Hiring

In Minnesota, businesses are generally required to secure workers compensation insurance before hiring employees. This insurance provides coverage for medical expenses and lost wages if an employee is injured on the job.

When Workers Compensation Insurance Is Required

• Employers with one or more employees: Most businesses must have workers compensation insurance as soon as they hire their first employee.
• Types of employees covered: Both full-time and part-time employees are included, but independent contractors typically are not.
• Exemptions: Some small businesses or specific industries may have exemptions, but these are limited and should be verified.

Operational Steps Before Hiring

• Obtain workers compensation insurance policy: Contact authorized insurance providers or use the Minnesota Workers Compensation Assigned Risk Plan if coverage is difficult to obtain.
• Register with the Minnesota Department of Labor and Industry: Ensure your business is properly registered for compliance and reporting purposes.
• Maintain accurate records: Keep documentation of insurance coverage and employee injury reports as part of your compliance and bookkeeping processes.

Additional Hiring Considerations

• Employee classification: Correctly classify workers to avoid misclassification risks that can affect insurance requirements and payroll taxes.
• Payroll integration: Coordinate workers compensation premiums with your payroll system for accurate reporting and payments.
• Compliance monitoring: Regularly review insurance status to ensure continuous coverage as your workforce changes.

As of 2026, securing workers compensation insurance before hiring employees in Minnesota is a critical step to meet state compliance and protect your business operations.