WORKERS’ COMPENSATION INSURANCE
WHAT IS WORKERS‘ COMPENSATION INSURANCE? Workers’ compensation insurance provides compensation to employees who have a work- related injury or disease. Compensation includes partial wage replacement and full payment of medical and vocational rehabilitation costs. In case of death, workers‘ compensation benefits are paid to the employee‘s dependents. Workers’ compensation insurance companies and self- insured employers pay these benefits and collect the premiums. The Minnesota workers’ compensation law was designed to standardize benefits, reduce litigation, and encourage early rehabilitation intervention, good employee/employer relationships and return-to-work programs. WHO IS REQUIRED TO HAVE WORKERS’ COMPENSATION INSURANCE? Generally all employers are required to have workers’ compensation insurance and display the name of their insurer in a conspicuous place on a poster provided by the Minnesota Department of Labor and Industry. Under Minn. Stat. § 176.021, every employer is liable to pay compensation in every case of personal injury or death arising out of and in the course of employment. Minn. Stat. § 176.181, subd. 2. requires employers who have not been approved for self-insurance (through the Minnesota Department of Commerce) to provide workers’ compensation insurance for their employees. Employees are generally defined as persons performing services for another for hire including minors and workers who are not citizens. A person who employs a child care provider (nanny) or other person (domestic) to work for them at the person’s home may be required to provide worker’s compensation insurance. Some entities, if they have no employees are not employers so they have no one to insure: • Sole Proprietorships: Individually or family run, non-incorporated businesses owned by one person, including true independent contractors, where any employees are immediate family members (a spouse, parent or child, regardless of age). Note: Once a non-immediate family member is hired, insurance is required. • Partnerships: Partners in business or farm operations where every employee is a partner or a spouse, parent or child of a partner, regardless of age. Other categories of employment are excluded from the workers’ compensation requirement: • Closely Held Corporations: Executive officers owning 25 percent or more of a closely held corporation or spouse, parent or child of the executive officer, regardless of age, may be automatically excluded unless the business elects to cover them. To qualify for this exemption, such corporation must have 10 or fewer shareholders and less than 22,800 hours of payroll in the preceding calendar year. Employees of such a corporation who are within the third degree of kindred according to the rules of civil law related by blood or marriage to an executive officer of the corporation may also be excluded by filing a written request to be excluded. This includes brothers, sisters, aunts, uncles, grandparents and grandchildren. Cousins may not be excluded from coverage.
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