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Workers Comp for Small Businesses


Introduction to Workers' Compensation Insurance

Workers' compensation insurance protects a business owner from claims by employees who experience a work-related injury or illness either sustained on business premises or due to business operations. In all states, most companies are required to carry workers' compensation insurance for their employees. You will need a separate workers' compensation policy for this type of coverage. Check with your state insurance department to see what is required for your small business.

Typically, workers' compensation covers the employee's medical expenses, rehabilitation costs and lost wages. If you do not have workers' compensation and one of your employees is injured on the job, your business may be liable for any medical expenses that individual incurs. You might also face fines and penalties for noncompliance.

Minnesota Workers' Compensation law states all employers are required to purchase workers' compensation insurance or become self-insured. This is often referred to as "mandatory coverage." Employers are generally defined as those that hire another to perform services. Employees are generally defined as people performing services for another, for hire, including minors, part-time workers and workers who are not citizens. There are limited exceptions to mandatory coverage listed in Minnesota Statutes 176.041. If an employer does not see exception(s) stated in the statute for every employee of theirs, the employer needs workers' compensation insurance.

If you do not have workers' compensation and one of your employees is injured on the job, your business may be liable for any medical expenses that individual incurs. You might also face fines and penalties for noncompliance.
If this is the first time you're purchasing workers' compensation insurance, the rate will depend on your payroll and your industry. After a few years, your premiums may be based on the actual experience of your company.

The Minnesota Department of Labor and Industry (DLI) is primarily responsible for workers' compensation insurance in Minnesota. Visit the DLI website for more specific and detailed information. 

Tips & Considerations Concerning Workers' Compensation Insurance

  • Take steps to minimize risk in the workplace, thereby lowering the chances of a worker getting injured.

  • If you own machinery, and it is operated by your employees, you are exposed to the risk of serious injuries. Always provide goggles, gloves and other recommended safety gear to help prevent accidents.

  • Keep office space in good physical condition. Maintain carpeting and railing on stairs. Make sure telephone and computer wiring is in good working condition and does not create any hazards. 

  • The U.S. Department of Labor's Occupational Safety & Health Administration (OSHA) offers specific information by industry type and provides other helpful resources to small businesses on how to comply with safety requirements that can limit work injuries. To learn more about OSHA's guidance to small businesses, visit the OSHA Web site at http://www.osha.gov/dcsp/smallbusiness/index.html.

*Some of this material is provided by NAIC