What insurance is required before hiring employees?

Required Business Insurance Before Hiring Employees in South Dakota

Before hiring employees in South Dakota, businesses must secure specific insurance coverage to comply with state regulations and protect their operations.

Workers' Compensation Insurance

Workers' compensation insurance is mandatory for most employers in South Dakota once you hire your first employee. This insurance covers medical expenses and lost wages for employees who suffer work-related injuries or illnesses.

• Obtain coverage through a private insurer or the South Dakota Workers’ Compensation Fund.
• Maintain accurate payroll records to determine insurance premiums.
• Report any workplace injuries promptly as part of compliance and recordkeeping.

Unemployment Insurance

Employers must register with the South Dakota Department of Labor and Regulation to pay unemployment insurance taxes. This insurance funds benefits for employees who lose their jobs through no fault of their own.

• Register online before paying wages.
• File quarterly wage reports and pay unemployment taxes on time.
• Keep detailed payroll records to support reporting requirements.

Additional Insurance Considerations

While not legally required before hiring, consider the following insurance types to manage operational risks:

• General liability insurance to protect against third-party claims.
• Employment practices liability insurance to cover risks related to hiring, termination, and workplace discrimination claims.
• Health insurance if your business meets the Affordable Care Act requirements for employee coverage.

Operational Tips

• Consult with a licensed insurance agent familiar with South Dakota regulations to ensure full compliance.
• Integrate insurance premium payments and reporting into your payroll and bookkeeping systems for efficiency.
• Review insurance coverage annually or when hiring additional employees to adjust policies accordingly.