Workers Compensation Insurance — Minnesota

Required by Minnesota law
from your very first employee.

Workers compensation pays medical expenses and lost wages when employees are injured on the job — protecting your employees and shielding your business from potentially devastating lawsuits. One serious injury without coverage can bankrupt a small business.

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Required from your first employee
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Covers medical care, lost wages & rehabilitation
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Claims support throughout the process

The cost of non-compliance is far worse than the cost of coverage.

Minnesota requires workers compensation for every employer with one or more employees — part-time, seasonal, or family members. The penalties for operating without coverage are severe:

  • Gross misdemeanor for first offense; felony for repeat violations
  • Fines up to $1,000 per day without coverage
  • Stop-work orders that shut down your business
  • Personal liability for all employee injury costs
  • No protection from employee lawsuits if an injury occurs

Beyond compliance, workers comp is the right thing to do for your team. The average workers comp claim costs over $40,000. A serious injury without coverage can create a financial exposure that ends a small business.

The workers comp trade-off

Employees get: Medical care, wage replacement, and rehab without needing to prove fault
Employers get: Protection from lawsuits and predictable insurance costs

What It Covers

What workers compensation pays for

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Medical Expenses

100% of approved medical treatment — emergency care, hospitalization, surgery, physical therapy, prescriptions, and medical equipment. No deductibles or copays for employees.

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Lost Wages (Temporary Disability)

Minnesota pays 2/3 of the employee’s average weekly wage during recovery, subject to the state maximum. Covers both total and partial disability.

Minnesota pays approximately $1,300/week maximum (2025). Continues until return to work or maximum medical improvement.
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Vocational Rehabilitation

If an injured employee cannot return to their previous job, workers comp funds job retraining, education, and placement assistance to return them to meaningful employment.

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Permanent Disability Benefits

Compensates employees for lasting impairment — either partial (still able to work with limitations) or total (cannot return to any gainful employment).

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Death Benefits

When a worker is killed on the job, workers comp provides funeral expenses, ongoing benefits for a surviving spouse, and benefits for dependent children.

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Employer Liability Protection

In exchange for guaranteed benefits to injured employees, employers receive protection from employee lawsuits. Employer liability coverage (Part B) handles any cases where an employee does sue.

How Rates Are Calculated

Premium = Payroll ÷ 100 × Class Code Rate × Experience Modifier

Three variables determine what you pay. Understanding each one helps you manage costs over time.

Class Codes

Every job type has a code with an associated rate per $100 of payroll. Office workers: ~$0.30–$0.55. Restaurant workers: ~$1.50–$3.00. Construction: $5–$15+. Roofers: $15–$30+. Accurate classification matters — misclassifying employees overpays or creates audit exposure.

Experience Modifier (EMR)

Your claims history compared to industry average. EMR of 1.0 is average. Below 1.0 = premium discount. Above 1.0 = surcharge. Your EMR follows your business for 3 years. Fewer claims = lower EMR = lower premium.

Cost Control

Safety programs, return-to-work programs, and prompt claims reporting all reduce long-term workers comp costs. Prevention keeps claims from happening. Return-to-work is the single biggest driver of claim cost reduction.

IndustryApprox. Rate per $100 PayrollExample: $300K Payroll
Office / Clerical$0.15–$0.50$450–$1,500/yr
Retail$0.75–$2.00$2,250–$6,000/yr
Restaurants$1.50–$3.00$4,500–$9,000/yr
Manufacturing$2.00–$8.00$6,000–$24,000/yr
Construction$5.00–$15.00+$15,000–$45,000/yr
Roofing$15.00–$30.00+$45,000–$90,000/yr
Quick Rate Estimate

What does workers comp cost for your business?

Rates are driven by hazard level and payroll. Answer four questions to get a realistic range based on your actual job risk.

Worker Classification Tool

Employee or independent contractor?
Minnesota has specific tests — and significant penalties for getting it wrong.

Effective July 1, 2024, penalties for misclassifying employees as independent contractors can reach $10,000 per worker per violation. Business owners, officers, and agents can be held personally liable for repeated violations. Use the tool below to assess your situation — then call us to make sure your workers comp program reflects your actual workforce.

Minnesota uses a 5-factor workers’ compensation test for general (non-construction) industries. These factors come from case law and have been in effect for decades — though the penalty structure was significantly increased effective July 1, 2024. Note: DOLI also references 34 industry-specific sub-tests under MN Rules Chapter 5224 for workers’ compensation determinations. Answer each question based on your actual working relationship — not the label on the contract.
This tool is for informational purposes only and does not constitute legal advice. Minnesota’s classification tests involve nuanced, fact-specific analysis. There is no single universal test — workers’ compensation, unemployment insurance, and wage and hour law each apply different standards. DOLI also references 34 industry-specific tests under MN Rules Chapter 5224 for workers’ compensation purposes. Consult an employment attorney or contact the Minnesota Department of Labor and Industry for guidance on your specific situation.
Effective March 1, 2025, construction workers providing commercial or residential building construction or improvement services must meet all 14 factors to qualify as independent contractors under Minn. Stat. § 181.723. A single “No” means the worker is an employee. General contractors may be held liable for misclassifications by their subcontractors.
This tool is for informational purposes only and does not constitute legal advice. The 14-factor test is evaluated at the time services are provided or performed — meaning licenses, insurance, and contract terms must remain valid throughout the engagement, not just at signing. Penalties can reach $10,000 per worker per violation, and DOLI may issue stop-work orders covering all job sites. Individual owners and officers can be held personally liable for knowing or repeated violations. Consult an employment attorney for guidance on your specific situation.
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Minnesota Workers Compensation Checklist

Understand your coverage requirements, learn how to manage your EMR, and prepare for your quote.

Download Free Checklist →
Our Process

Three steps to workers comp coverage

1

Review Your Workforce

We assess your employee classifications, payroll, and claims history. Accurate class codes are essential — misclassification leads to overpaying or audit exposure at year-end.

2

Shop Multiple Carriers

As an independent agency, we compare workers comp carriers across the market — including specialty markets for higher-risk industries. Rates vary significantly between carriers for the same risk.

3

Manage Claims and Costs

We support you through the claims process and help implement safety and return-to-work practices that protect your EMR over time. Lower claims history means lower premiums in future years.

Frequently Asked Questions

What employers ask about workers comp

Yes. Minnesota requires workers compensation insurance for most employers with one or more employees — including part-time, seasonal, and family members. Limited exceptions exist for sole proprietors without employees and some agricultural operations. When in doubt, assume coverage is required.
Yes. Minnesota requires workers comp for all employees regardless of hours worked. The cost is proportional — a part-time employee with lower annual earnings contributes less payroll to your premium calculation, but must be covered.
Your EMR reflects your claims history compared to other businesses in your industry. An EMR of 1.0 is average. Below 1.0 means fewer claims than average — you receive a premium discount. Above 1.0 means more claims — you pay a surcharge. Your EMR is recalculated annually using three years of claims data and follows your business across carriers.
Provide immediate first aid or emergency care. Document the incident thoroughly — date, time, what happened, witnesses. Report the injury to your insurance carrier promptly. Minnesota has specific reporting timeframes — late reporting can complicate claims handling. Call us and we will walk you through the process.
Operating without required coverage is a gross misdemeanor for the first offense and a felony for repeat offenses. You can be fined up to $1,000 per day, receive stop-work orders, and be personally liable for all employee injury costs — with no lawsuit protection. The consequences of non-compliance far exceed the cost of coverage.
True independent contractors are not covered by your workers comp. However, calling someone a contractor does not make them one. Minnesota uses different classification tests depending on the context — a 5-factor test for general workers’ compensation, and a 14-factor all-or-nothing test for construction workers effective March 1, 2025. DOLI also references 34 industry-specific sub-tests. Misclassification can result in penalties of up to $10,000 per worker. Use our classification tool above to assess your situation.
Return-to-work programs get injured employees back to productive work as soon as medically appropriate — even in a modified or light-duty capacity. Time away from work is the single biggest driver of workers comp claim cost. Every week an employee is on full disability adds to the claim total and affects your EMR. Businesses with structured return-to-work programs consistently have lower total workers comp costs.
Get Your Quote

Your employees deserve protection. Your business requires it.

We find competitive workers comp coverage and help you manage your EMR over time. One less thing to worry about.

  • Multiple carrier options including specialty markets
  • Accurate classification to avoid overpaying
  • Claims support throughout the process
  • Return-to-work guidance to protect your EMR
  • Annual payroll audits managed smoothly

Start your free quote

Fill out the form and an agent will be in touch within one business day.

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Workers comp is required — but the rate you pay isn’t fixed.

Accurate classification, carrier selection, and EMR management all affect what you pay year over year. That’s where a local agent earns their keep.

Featured Agent
Carolyn Todd — Options Insurance

Carolyn Todd

Commercial Lines Agent

I have been writing workers comp for Minnesota businesses for 15 years — across industries from restaurants and retailers to contractors and manufacturers. The premium you pay is heavily influenced by how your employees are classified and how claims are handled. I make sure you are not overpaying through misclassification, and I help you navigate the claims process in a way that protects your experience modifier over time.

(952) 392-9508 carolyn@options-insurance.com options-insurance.com
👥 Meet the full Options Insurance team →
Last updated: March 26, 2026