Do businesses need workers compensation insurance for payroll?

Workers Compensation Insurance Requirements for Minnesota Businesses

In Minnesota, businesses with employees are generally required to carry workers compensation insurance. This insurance covers 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 with at least one employee must maintain workers compensation coverage.
• Corporate officers: Officers of corporations may be excluded if they file the appropriate waiver, but this does not apply to LLC members or partners.
• Seasonal and part-time employees: Coverage is required regardless of full-time or part-time status.

Operational Considerations

• Payroll integration: Ensure payroll systems account for workers compensation insurance premiums, which are often calculated based on total payroll and job classifications.
• Employee classification: Properly classify employees to determine accurate premium rates and maintain compliance.
• Recordkeeping: Keep detailed payroll and injury records to support claims and audits.
• Compliance monitoring: Regularly review insurance coverage to meet Minnesota Department of Labor and Industry requirements.

As of 2026

Businesses should verify current Minnesota workers compensation insurance requirements with the Department of Labor and Industry, as rules and thresholds may change. Maintaining proper coverage helps avoid penalties and supports employee safety and financial protection.