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General duty to insure

All employers are required by Minnesota law (Minnesota Statutes, section 176.181, subdivision 2) to either purchase workers' compensation insurance to provide benefits to their employees for work-related injuries or obtain approval from the Minnesota Department of Commerce permitting self-insurance upon proof of the employer's financial ability to do so.

There is no minimum number of employees an employer must have before insurance is required. Therefore, an employer with only one part-time employee generally must provide coverage. Several penalties may be assessed against employers that fail to properly insure their employees.


Minnesota Statutes 176.181 gives the commissioner of the Department of Labor and Industry the authority to enforce the mandatory coverage laws. This statute is one of the provisions detailing the commissioner's powers of enforcement. These include the ability to enter and inspect a business and its records, take depositions, issue subpoenas and order the production of documents to determine if insurance coverage as required by law exists. If the inquiry reveals inadequate or nonexistent coverage, the commissioner's representative will continue the investigation and determine what action, if any, is appropriate.

Injured employee, no employer coverage

If an employee suffers a compensable injury and the employer has not purchased insurance coverage or followed the proper procedures for self-insurance, the employee may request the state Special Compensation Fund pay the appropriate benefits. A compensation judge will first determine whether the employer is liable for the worker's injury and, if appropriate, order the Special Compensation Fund to pay all appropriate compensation benefits to the employee and order the employer to reimburse the Special Compensation Fund along with a penalty in the amount of 65 percent of those benefits.

Alternatively, the employee may elect to sue the employer for the injury in a civil action for the full extent of the employee's losses. The amount awarded in such a case may be considerably higher than the amount of workers' compensation benefits due.

Where the employer fails to purchase workers' compensation insurance, they may not defend a civil personal injury lawsuit by claiming the usual common law defenses (such as assumption of risk) unless they can prove that the employee was willfully negligent.