South Dakota workers compensation requirements decide exactly when you must carry coverage, who counts toward the threshold, and what it costs to skip it. This guide breaks down the South Dakota workers compensation requirements in plain English — the employee count that triggers the mandate, who is exempt, the penalty for going without, and how to get covered. All figures are from South Dakota sources, verified as of June 2026.
In This South Dakota Guide:
Is Workers’ Comp Required in South Dakota?
South Dakota does not require private employers to carry workers’ compensation insurance; coverage is entirely voluntary, making it one of only two states (along with Texas) where there is no mandate, though most employers carry it to gain lawsuit immunity and avoid unlimited civil liability
South Dakota Workers’ Comp Requirements at a Glance
Here are the exact South Dakota workers compensation requirements every employer should know:
| Employees that trigger the mandate | 0 |
| Which workers count | No employee threshold exists because South Dakota has no workers’ compensation mandate; there is no number of employees that triggers a requirement; employers of any size may voluntarily elect coverage but are never compelled to carry it |
| Who is exempt | Even when an employer voluntarily carries coverage, the following are excluded: domestic servants working fewer than 20 hours per week and fewer than 6 weeks in any 13-week period, farm and agricultural laborers, certified independent contractors, and elected officials of the state or any political subdivision; sole proprietors and partners are also excluded by default but may elect to be covered |
| Owners & officers | Sole proprietors and partners are automatically excluded from coverage but may voluntarily opt in; corporate officers and LLC members are automatically included in coverage when the employer carries a policy but may individually elect to reject inclusion as employees under SDCL 62-1-3; an employer whose executive officers elect out must extend group health insurance coverage to those officers |
| Penalty for going without | Because coverage is voluntary, there is no fine or criminal penalty for not carrying workers’ compensation insurance; however, an uninsured employer loses exclusive-remedy protection and faces unlimited civil liability — an injured employee may sue in circuit court for negligence with no cap on damages, or may elect to proceed under the workers’ compensation statute and recover all medical expenses plus twice the disability or death compensation otherwise allowed; employers who do carry coverage and fail to report a workplace injury within 7 days face a Class 2 misdemeanor and a 100 dollar civil penalty per occurrence |
| Monopolistic state? | No — buy from private carriers |
| State fund | NONE — South Dakota does not operate a state workers’ compensation insurance fund; all coverage is through private carriers or self-insurance |
How to Get Workers’ Comp Coverage in South Dakota
Purchase a policy from a licensed private insurance carrier on the voluntary market, apply to self-insure through the South Dakota Department of Labor and Regulation (must demonstrate financial ability and post a surety bond, certificate of deposit, or irrevocable letter of credit), or obtain coverage through the NCCI assigned risk pool if unable to find voluntary-market coverage
Private market: YES
What Workers’ Comp Covers in South Dakota
Workers’ compensation is a no-fault system: an injured employee gets benefits without having to prove the employer did anything wrong, and in exchange gives up the right to sue for most workplace injuries. A typical South Dakota policy pays for medical treatment tied to a work injury, part of the wages lost while the worker recovers, longer-term disability benefits if the injury is permanent, and death benefits to a family.
It also includes employers-liability coverage, which protects the business if an injury still leads to a lawsuit. That trade-off is the practical heart of the South Dakota workers compensation requirements: the coverage exists to keep one bad injury from sinking both the worker and the business.
Employees vs. Independent Contractors in South Dakota
The most common way owners get the South Dakota workers compensation requirements wrong is by assuming a worker is an “independent contractor” who does not count. State agencies look at how the work is actually controlled, not the label on a 1099. If South Dakota decides a contractor was really an employee, the business can owe back premiums and penalties as if coverage should have been in place all along.
When you are close to the employee threshold, confirm each worker’s status with your state board before you decide you are exempt.
Other South Dakota workers’-comp rules: Employers who voluntarily carry workers’ compensation gain exclusive-remedy protection, meaning employees generally cannot sue them in tort for workplace injuries; uninsured employers have no such shield and face unlimited civil liability including the potential for double compensation under the statute; South Dakota uses NCCI classification codes and experience rating;
the state does not have a waiting period before benefits begin for temporary total disability (benefits start from the 8th day of disability but are retroactive to the first day if disability exceeds 7 calendar days); confirm all coverage decisions with a licensed insurance agent and the South Dakota DLR
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Understanding South Dakota Workers Compensation Requirements
The South Dakota workers compensation requirements exist to make sure injured employees get medical care and lost wages without having to sue. For most owners, the South Dakota workers compensation requirements come down to one number: the employee count that triggers the mandate, shown in the table above.
Once you hit that count, South Dakota workers compensation requirements apply whether you planned for them or not, and the penalty for going without is real. If any part of the South Dakota workers compensation requirements is unclear for your business, your state workers’-comp board can confirm the threshold, the exemptions, and how to get covered.
Next step: Once you know what your business in South Dakota actually needs, comparing quotes from several carriers takes only a few minutes. Many owners do this right after they understand their state and trade requirements.
Frequently Asked Questions
Is workers’ comp required in South Dakota?
South Dakota does not require private employers to carry workers’ compensation insurance; coverage is entirely voluntary, making it one of only two states (along with Texas) where there is no mandate, though most employers carry it to gain lawsuit immunity and avoid unlimited civil liability
What is the penalty for not having workers’ comp in South Dakota?
Because coverage is voluntary, there is no fine or criminal penalty for not carrying workers’ compensation insurance; however, an uninsured employer loses exclusive-remedy protection and faces unlimited civil liability — an injured employee may sue in circuit court for negligence with no cap on damages, or may elect to proceed under the workers’ compensation statute and recover all medical expenses plus twice the disability or death compensation otherwise allowed;
employers who do carry coverage and fail to report a workplace injury within 7 days face a Class 2 misdemeanor and a 100 dollar civil penalty per occurrence
Who is exempt from South Dakota workers’ comp?
Even when an employer voluntarily carries coverage, the following are excluded: domestic servants working fewer than 20 hours per week and fewer than 6 weeks in any 13-week period, farm and agricultural laborers, certified independent contractors, and elected officials of the state or any political subdivision; sole proprietors and partners are also excluded by default but may elect to be covered
Official South Dakota Sources & Resources
- South Dakota South Dakota Department of Labor and Regulation, Division of Labor and Management: https://dlr.sd.gov/workers_compensation/default.aspx
- South Dakota Workers’ Comp Statute: https://sdlegislature.gov/Statutes/62
- U.S. Department of Labor — Workers’ Comp: dol.gov
- U.S. Small Business Administration: sba.gov
These South Dakota workers compensation requirements were last verified against official sources in June 2026. Rules and penalties change — confirm the current figure with your state workers’-comp board or a licensed agent.
More South Dakota Business Insurance Guides
Disclaimer: This guide is informational only and is not insurance, legal, or tax advice. Business Insure Guide is an independent educational resource, not an insurance agency or carrier. Coverage needs, legal requirements, and prices vary by business, profession, and state and change over time. Always verify the exact requirement and price with a licensed insurance agent and your state before you buy.