Running a business comes with many responsibilities, and protecting your employees is one of the most important. For South Dakota employers, understanding workers’ compensation insurance can help you prepare for workplace injuries while protecting your business from potentially significant financial and legal consequences.
If you own a construction company, restaurant, retail store, contracting business, or another type of company in South Dakota, it’s important to understand how workers’ compensation works and whether it applies to your business.
Is Workers’ Compensation Required in South Dakota?
South Dakota’s workers’ compensation rules are somewhat different from those in many other states. South Dakota does not have a law requiring every employer to carry workers’ compensation insurance. However, the state strongly recommends that employers carry coverage because an uninsured employer may be sued in civil court by an injured employee.
South Dakota’s workers’ compensation law generally covers employers, with certain exceptions. Those exceptions can include certain domestic servants, farm or agricultural labor, certain independent contractors, and other specifically excluded workers.
Because determining whether a worker is an employee or independent contractor can be complicated, businesses should carefully review their individual circumstances.
What Does Workers’ Compensation Insurance Cover?
Workers’ compensation insurance is designed to provide benefits for covered work-related injuries and occupational diseases.
Depending on the circumstances, benefits may include:
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Medical treatment
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Disability benefits
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Rehabilitation
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Compensation for certain permanent disabilities
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Survivor benefits following a qualifying workplace death
The purpose is to help an injured worker receive appropriate benefits while providing employers with a structured system for handling workplace injury claims.
Who May Be Covered?
South Dakota’s workers’ compensation law generally applies to employees, although there are specific exceptions.
Some categories that may be excluded include:
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Certain domestic workers
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Farm or agricultural labor
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Certain independent contractors
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Certain elected government officials
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Certain workfare participants
The distinction between an employee and independent contractor can be particularly important for contractors and small businesses. Simply calling someone an independent contractor does not necessarily determine their legal classification. South Dakota law considers factors such as the worker’s independence and whether they operate an independently established trade or business.
Why Carry Workers’ Compensation If It’s Not Required?
Even though South Dakota does not require every employer to purchase workers’ compensation insurance, going without coverage can expose a business to significant risk.
If an employee is injured while working, medical treatment and lost wages can become expensive quickly. An uninsured employer may also face a civil lawsuit from an injured worker.
For many businesses, carrying workers’ compensation insurance provides an important layer of financial protection while helping employees receive benefits after qualifying workplace injuries.
What Should Employers Do After a Workplace Injury?
Employers should take workplace injuries seriously and follow the appropriate reporting procedures.
In South Dakota, an employee generally must provide written notice of an injury to their employer within three business days. Once the employer learns of the injury, the employer has seven days, excluding Sundays and holidays, to complete and submit the First Report of Injury.
Prompt reporting can help ensure the claim is handled properly and that the injured employee can access appropriate benefits.
Workers’ Compensation for Contractors and Small Businesses
For contractors, construction companies, electricians, carpenters, concrete contractors, and other trades, workplace injuries can be a significant concern.
Employees may work with:
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Power tools
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Heavy equipment
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Ladders
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Construction materials
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Electrical systems
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Machinery
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Vehicles
Even with strong safety procedures, accidents can happen.
Having the appropriate workers’ compensation coverage can help protect both employees and the business when a qualifying workplace injury occurs.
Don’t Confuse Workers’ Compensation with General Liability
Workers’ compensation and General Liability Insurance serve different purposes.
Workers’ compensation is primarily designed to address covered work-related employee injuries and illnesses.
General Liability Insurance, on the other hand, generally protects a business against certain third-party claims involving bodily injury, property damage, and related liabilities.
Many businesses need both types of coverage because they protect against different risks.
Continue Learning About Business Insurance
Workers’ compensation is only one part of a complete business insurance strategy. Depending on what your company does, you may also need protection for your property, vehicles, equipment, customers, or other business-related risks.
Continue reading one of our other insurance guides to learn more about coverage options and ways to protect the business you’ve worked hard to build.
Review Your Coverage as Your Business Grows
Your insurance needs can change as your business expands.
Consider reviewing your workers’ compensation insurance and other commercial policies if you:
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Hire additional employees
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Expand into new locations
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Take on larger projects
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Purchase new equipment
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Add company vehicles
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Change the type of work your business performs
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Increase your payroll
Keeping your insurance information updated can help ensure your coverage reflects your current operations.
Work with an Independent Insurance Agency
Choosing the right commercial insurance can be complicated, particularly when your business has employees, contractors, vehicles, equipment, and multiple job sites.
An independent insurance agency can compare coverage options from multiple insurance carriers and help you determine what types of insurance may be appropriate for your business.
Your agent can also help you review your policies as your business changes and discuss available coverage options based on your industry and operations.
Final Thoughts
Understanding workers’ compensation requirements in South Dakota is an important responsibility for business owners. While South Dakota does not require every employer to carry workers’ compensation insurance, going without coverage can leave an employer exposed to significant financial and legal risks if an employee is injured.
For many businesses, workers’ compensation is an important part of protecting employees and maintaining financial stability when workplace injuries occur.
If you’re reviewing your business insurance, get a workers’ compensation quote to explore coverage options for your South Dakota business and discuss your specific insurance needs.
This article is for general informational purposes and is not legal advice. Workers’ compensation requirements and exemptions can depend on the specific circumstances of your business. Consult the South Dakota Department of Labor and Regulation or a qualified professional for guidance regarding your situation.
