Workers comp coverage required in South Dakota
Employers with one or more employees are generally required to carry workers' compensation insurance. Verified 2026-05-09.
Who must carry workers comp in South Dakota?
South Dakota workers compensation coverage is required Employers with one or more employees are generally required to carry workers' compensation insurance.
The threshold language matters: states write the rule slightly differently. Some count any worker, some count only W-2 employees, some count owners separately, some have industry-specific exemptions (agriculture, domestic service, casual labor). For a South Dakota employer with a non-trivial workforce, the safest default is: assume coverage is required and confirm with the state department of insurance or a local agent.
How the threshold interacts with 1099s and subs
Individuals performing services are presumed to be employees unless they meet specific criteria for independent contractor status, including control, separate business, and risk of loss. A principal contractor is liable for the workers' compensation benefits of employees of an uninsured subcontractor if the work is part of the principal contractor's usual trade or business.
Penalty for going without
An uninsured employer may be sued in civil court by an injured worker. The financial penalty is usually a fraction of the human cost: an injured employee at an uncovered employer can sue directly under tort law instead of being limited to the workers comp benefit, exposing the owner to lost-wage damages, pain and suffering, and punitive damages without the corporate veil.
Related reading
FAQs
Who has to carry workers comp in South Dakota?
Employers with one or more employees are generally required to carry workers' compensation insurance.
When does the requirement kick in for a new South Dakota employer?
The clock starts on the first day the first qualifying employee is on the books. South Dakota does not have a grace period for new employers, so a policy needs to be bound on or before the first hire date. Some agents can issue same-day binders for low-risk class codes.
What is the penalty for not having workers comp in South Dakota?
An uninsured employer may be sued in civil court by an injured worker.
Do 1099 contractors trigger the coverage requirement in South Dakota?
Individuals performing services are presumed to be employees unless they meet specific criteria for independent contractor status, including control, separate business, and risk of loss.
Are subcontractors counted toward the threshold in South Dakota?
A principal contractor is liable for the workers' compensation benefits of employees of an uninsured subcontractor if the work is part of the principal contractor's usual trade or business.
What happens if I am audited and found non-compliant in South Dakota?
South Dakota typically issues a stop-work order, assesses back premium for the period of non-coverage, and adds penalties on top. Specifically: An uninsured employer may be sued in civil court by an injured worker. Severe or repeat violations can lead to criminal charges and personal liability for the business owner, separate from the corporate veil.