Generally speaking, Minnesota law requires employers to provide workers’ compensation coverage for all employees.

But the law does allow employers to exclude certain types of employees from coverage, such as small business owners and their close relatives.

Following are the types of employees that are exempt from mandatory insurance coverage by Minnesota state law :

• Sole proprietorships and partnerships:
  Someone operating a business as a sole proprietor isn't required to get workers' compensation insurance for his or her spouse, parents or children working in the business, regardless of age or wage rate. However, the business owner would have to provide coverage for any other employees. Similarly, members of a partnership — such as a law firm — don't have to purchase coverage for themselves. If their spouses, parents or children are employed by the partnership, they’re not required to provide coverage for them either.
• Executive officers of a closely held corporation:
  A closely held corporation is one in which the capital stock is held by no more than 10 people and has had less than 22,880 hours of payroll in the preceding calendar year (January 1 to December 31). Executive officers of closely held corporations can be excluded from coverage if they are elected or appointed in accordance with the company's charter or bylaws and they own at least 25 percent of the capital stock of the corporation (exclusive of any stock owned by other family members). If executive officers qualify to be excluded from workers’ compensation coverage, their spouses, parents and children are also excluded if they work in the same business. Relatives within the third degree of kinship — such as uncles, nieces, siblings and grandchildren — can also be excluded, but to do so, the employer must file a written election with the Minnesota Department of Labor and Industry.
• Managers of limited liability corporations:
  A limited liability company (LLC) has some attributes of a corporation and others of a partnership. If an LLC has 10 or fewer members and has less than 22,880 hours of payroll in the preceding calendar year (January 1 to December 31) managers who own at least a 25 percent membership interest aren't required to purchase workers' compensation coverage for themselves. If managers qualify to be excluded from workers’ compensation coverage, their spouses, parents and children are also excluded if they work in the same business. As with executive officers, relatives of a manager within the third degree of kinship can also be excluded, but to do so, the employer must file a written election with the Minnesota Department of Labor and Industry.

Even if state law doesn't require workers' compensation coverage for certain individuals, a business can choose to cover them by notifying its workers' compensation insurer in writing.

If you find that you do need workers' compensation insurance, you can get a quote through our website.

What about other states?

The rules on which family members can be excluded from workers’ compensation coverage, if any, differ based on state laws. Here are the rules in SFM’s core states:

Indiana

Exceptions in Indiana workers’ compensation law:

• Sole proprietors, limited liability company managers, and partners aren’t covered unless they elect to be
• Agricultural employees performing traditional types of farm labor directly related to the tending of crops and livestock are not included in the work comp statute. Workers doing other types of work in a farm setting may be covered by work comp law. Employers can purchase a work comp policy for the farm workers

Iowa

Exceptions in Iowa workers’ compensation law:

• Sole proprietors
• Independent contractors, limited liability company members and partners aren’t covered unless they elect to be
• For family farms, sole proprietors, partners, officers, members of an LLC and their spouses, parents, brothers, sisters, children and step-children are excluded

Kansas

There is an exception in Kansas workers’ compensation law: Agricultural pursuits and employments are excluded from the Work Comp Act, unless the employer is the state of Kansas.

Nebraska

There are a few exceptions in Nebraska workers’ compensation law, including:

• Household domestic servants in a private residence
• Some agricultural operations such as those employing only relatives or those employing fewer than 10 full-time employees for fewer than 13 calendar weeks (consecutive or not)
• Self-employed individuals, sole proprietors, partners and limited liability company members who don’t elect to be covered

South Dakota

There are a few exceptions in South Dakota workers’ compensation law:

• Domestic servants working less than 20 hours per week or for less than six weeks in any 13-week period
• Farm or agricultural labor
• One whose employment is not in the usual course of trade, business, occupation or profession of the employer (such as independent contractors)

Tennessee

According to the Tennessee Department of Labor & Workforce Development , there are a few exceptions in Tennessee workers’ compensation law:

• State and local governments and those employing farm laborers or domestic help
• Sole proprietors, partners and members limited liability companies (LLCs) aren’t included in the count of employees
• Corporate officers can exempt themselves but are not excluded from the count of employees unless they are not compensated
• Family members, if the applicant and members of the same family hold at least 95% ownership of the business

Wisconsin

There are a few  exclusions in Wisconsin , including:

• Domestic servants, such as nannies
• Sole proprietors, partners, and members of limited liability companies (unless the organization elects to cover these individuals)
• Volunteers of nonprofit organizations whose salary or in-kind compensation doesn’t top $10 per week
• Employees of Native American tribal enterprises, unless the tribe elects to waive its sovereign immunity

Learn more about workers’ compensation coverage

Determining whether your employees fit into these categories can be complicated. It’s best to contact your agent, insurer, employment law attorney, or state’s labor department to find out whether you’re required to provide workers’ compensation insurance.

To hear more about this subject, watch our Q&A video below:

Originally published April 2019; updated January 2025. This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.