Who Needs Workers’ Compensation Coverage?

This issue is governed by Minnesota Statutes, section 176.181, subd. 2.  All employers must purchase workers’ compensation insurance or be self-insured to provide benefits to employees in the event of a work-related injury.  To qualify to be self-insured, an employer must obtain approval from the Minnesota Department of Commerce. An employer who does not have workers’ compensation coverage, could be subject to multiple penalties.  

An employer with any employee must have coverage for workers’ compensation.  There is no minimum number of employees. An employer with one part-time employee typically must have insurance.  

The question then arises, what is the definition of an employee?

A person who performs a service for another, for hire, is the general definition of an employee.  An employee can also include minors, part-time workers, even some nannies or other work done in a person’s home, and workers who are not citizens.  There are very few exceptions as to who is not considered an employee.  

One of those exceptions is if the worker falls under the classification of an independent contractor.  The main factor to consider if someone is an independent contractor, does the person have the means and manner of control over the job.  Questions to consider include, does the person provide his or her own tools or equipment, is the worker required to comply with instructions about when, why and how the work is done, is the worker required to make reports?

The Minnesota Rules set out specific occupations that can be identified as independent contractors.  This list includes, but is not limited to: barbers, accountants, collectors, consultants, domestic service, babysitters, industrial homeworkers, commission salespeople or manufacturers’ representatives, professional persons, taxicab drivers, truck owner-drivers, and sports officials.  If a specific occupation is not listed, then the general criteria and other factors to consider are found in Minn. Rules 5224.0302 through 5224.0340. 

If you have any questions about whether you need workers’ compensation insurance coverage, the Minnesota Department of Labor and Industry will answer questions. Their number is: 651-284-5032 or their website provides information: www.dli.mn.gov.