South Dakota Workers’ Compensation Rules for Employers

The first time I priced out a South Dakota hire, I asked which carrier we should use for workers' compensation. The answer came back that the state does not require one. I asked for that again, because everywhere else the question is which threshold you have crossed, not whether the obligation exists at all.

South Dakota really does leave the decision with the employer. The statute is written as an election rather than a mandate, and the whole consequence of declining lands in a courtroom instead of on a penalty notice. That design catches people out, because it looks like an exemption and behaves like a trade.

What follows is the South Dakota rule set: who the law reaches, who sits outside it, where a policy comes from, what goes on the wall, how fast an injury has to move, and what an uninsured employer is actually exposed to. For how the insurance itself works, read the guide to workers compensation insurance. This page is South Dakota only.

Is Workers' Compensation Required in South Dakota?

No. The Department of Labor and Regulation puts it in a single sentence at the top of its workers compensation page: there is no law in South Dakota requiring any employer to carry workers compensation insurance, though it is highly recommended, and an uninsured employer may be sued in civil court by an injured worker.

The statutes get there by a slightly odd route. SDCL 62-5-1 tells an employer coming within the compensation provisions of the title to secure the payment of compensation by insuring it or by qualifying to self-insure. SDCL 62-5-7 then defines the failure to do so, rather than punishing it.

An employer that has not complied is deemed to have elected not to operate under the provisions of the title. Nothing is confiscated and no fine issues. You simply stop being an employer that the compensation system covers, along with everything that protection was doing for you.

Two more sections complete the frame. SDCL 62-3-3 presumes every employer and employee has accepted the title and is bound by it. SDCL 62-3-5 then withdraws that presumption from any private employer that has not complied with SDCL 62-5-1 to 62-5-5, which is the sentence that decides the rest of this page.

There is no headcount anywhere in it. A two-person welding shop and a four-hundred-person processing plant read the identical statute, which is unusual: most states switch coverage on at one, three, four or five employees, and the state-by-state requirements look nothing alike once you cross the border.

Public employers sit in their own lane. SDCL 62-5-6 says the state, a municipality or another political subdivision need not furnish insurance or security at all, but may do so if it wants, which is why a city and a private contractor working for it can be in completely different positions.

Who Sits Outside the South Dakota System

Five groups are outside the title, and the department lists them plainly on its coverage page: domestic servants below a working threshold, farm and agricultural laborers, workers outside the usual course of the employer's business, certain elected officials, and workfare participants.

Domestic work is the only exclusion in Title 62 with a numeric test. Under SDCL 62-3-15 a domestic servant is outside the title unless working for the employer more than twenty hours in a calendar week and more than six weeks in any thirteen-week period. Both parts have to be true before the exclusion drops away.

Agricultural labor is excluded outright by the same section, with the commercial harvest machinery businesses of SDCL 62-3-16 pulled back in. That leaves a working farm outside the system for its own hands while a custom combining outfit crossing the same section line is inside it.

Corporate officers run the other way from what most owners expect. SDCL 62-1-7 makes every duly elected or appointed executive officer of a corporation an employee under the title, other than officers of charitable, religious, educational and other nonprofit corporations, who are outside unless the corporation specifically includes them under SDCL 62-1-8.

An officer who wants out serves written notice of rejection on the corporation, personally or by certified mail, either at the time of election or appointment or more than thirty days before the injury, under SDCL 62-3-5.1. The rejection is withdrawn the same way and on the same thirty-day clock, so this is a calendar item rather than a phone call.

Contractor status is the messiest line here as everywhere, and South Dakota gives it two pieces of paper. Truck owner-operators can be certified by the department under SDCL 62-1-10 to 62-1-13, on the criteria in the department's independent contractor page and the rules at ARSD 47:03:07.

An independent contractor who is not an employer or a general contractor, and who is not covered by anyone else's policy, can sign an affidavit of exempt status under SDCL 62-1-19, on the notarized form the Division of Insurance prescribes under SDCL 62-1-20. It creates a rebuttable presumption that the signer is not an employee, and knowingly putting false information on it is a Class 2 misdemeanor. Whether the classification holds up at all is the independent contractor test, not the form.

Two limits on that affidavit matter more than the affidavit does. SDCL 62-1-22 says no employer or general contractor has to accept one instead of a certificate of coverage. And SDCL 62-3-10 makes a principal or intermediate contractor liable for compensation to an injured employee of a subcontractor working on the contract, to the same extent as the immediate employer, when the injury happens on premises the principal controls.

Where a South Dakota Employer Buys Coverage

From the open market, because South Dakota has no state fund and is not a monopolistic state. SDCL 62-5-2 lets you secure payment through any stock corporation writing workers compensation insurance, or any mutual employer's liability association authorized to transact that business here, or an authorized reciprocal or interinsurance association.

SDCL 62-5-3 covers the reciprocal route in more detail, requiring the association to be authorized by the director of the Division of Insurance. Because the market is competitive rather than monopolistic, employer's liability protection arrives inside an ordinary policy instead of having to be bought as a separate contract.

Two housekeeping details sit on top of the purchase. SDCL 62-5-8 caps the commission an insurer may pay for placing or renewing a policy at fifteen percent of the premium. SDCL 62-5-9 requires the writing company to file a certificate of the policy with the department, and the department runs an online coverage verification service anyone can search.

If nobody will quote you, the residual market catches it. The Division of Insurance publishes the state instructions for the assigned risk plan on its workers compensation page, alongside the loss cost multipliers and the fourteen dollar policy fee that SDCL 10-44-2(4) makes the insurer remit for every policy issued or renewed.

Self-insurance is the third route and it is not a small business route. SDCL 62-5-5 requires annual proof of solvency and financial ability to pay compensation, plus an application fee the department sets by rule and the statute caps at twenty-five hundred dollars. Approval produces a certificate of exemption, and the department can revoke it.

The security is the real barrier. Under SDCL 62-5-10 a self-insurer posts a bond, cash, a certificate of deposit, approved government securities, an irrevocable letter of credit or an irrevocable trust, in a total equal to the greater of two hundred fifty thousand dollars, twice the compensation and medical claims it paid last calendar year, or its own declared reserve.

One disclosure, since this page is about a purchase. FirstHR is an HR platform, not an insurer, a broker or an agent, and we sell no coverage of any kind. What our platform holds is the employee record, the signed acknowledgment and the onboarding paperwork that turn into evidence when a claim or a premium audit arrives.

That audit is worth planning for either way. Premium follows payroll and class code, so the numbers you report at binding get trued up later, and a workers compensation audit goes far more smoothly when job duties and wage records were captured accurately at hire rather than reconstructed a year afterward.

Posters and What a New Hire Gets

One posting is required, and it is about safety rather than coverage. SDCL 62-2-11 tells employers to display informational postings promoting safety in the workplace in visible locations throughout the business premises, in accordance with rules the Department of Labor and Regulation promulgates.

The department's posting requirements page is unusually blunt about the scale of the obligation: South Dakota law requires only two workplace postings in total. One is the safety posting under the workers compensation law. The other is the reemployment assistance notice, which belongs to the unemployment system.

There is no prescribed format for the safety poster. The department publishes three ready options, one of them in both English and Spanish, and any posting that genuinely encourages safe work satisfies the section. Everything else on a typical break room wall in South Dakota is a federal poster rather than a state one.

Now the part that surprises employers arriving from a mandatory state. Nothing in Title 62 requires a workers compensation pamphlet at hire, a written notice of coverage status, or an annual filing telling the state whether you carry a policy. A new employee learns where you stand only if you choose to tell them.

One statutory handover does exist, and it comes after an injury rather than at hire. SDCL 62-6-1 requires the injury record to be signed by the employer and a copy given to the injured employee, which is the only document Title 62 puts directly into a worker's hands.

Injury Reporting Deadlines

Two clocks run, and they are short. The employee has three business days to give you written notice. You have seven calendar days, Sundays and legal holidays excluded, to record the injury and file the First Report of Injury.

SDCL 62-7-10 requires an employee claiming compensation to notify the employer immediately or as soon after as practical, with written notice no later than three business days after the injury. The notice needs no set form but must say when, where and how it happened.

Missing that deadline hurts the employee rather than you, and not always. The claim is barred unless the employer already had actual knowledge of the injury, or the employee had good cause for the delay, a determination the statute directs be construed liberally in the employee's favor.

Your own duties come from two sections that share a deadline. SDCL 62-6-1 requires a record of every injury on a department-approved form, completed within seven calendar days of knowledge, signed, copied to the employee and kept at least four years. SDCL 62-6-2 requires the written report itself on the same clock.

That report goes to your insurer if you bought a policy, and to the department if you self-insure. It is triggered by an injury requiring medical treatment beyond minor first aid, or one that incapacitates the employee for seven or more calendar days, and it is filed on Form 101 through the department's online system or on paper.

The department's employer rights and responsibilities page adds the rule that keeps employers out of trouble: file within seven days of first learning of the injury even if the employee never handed you written notice, because your insurance company, not you, decides whether the claim is compensable.

What Going Without Coverage Actually Costs

There is no fine, no stop-work order and no criminal charge for having no coverage, because no South Dakota statute imposes the duty in the first place. The exposure is entirely civil, and it is concentrated in one section of the code that most uninsured employers have never read.

Start with what you give up. The exclusive remedy in SDCL 62-3-2 shuts out every other claim an injured worker might bring against the employer, its partners, officers and directors, apart from intentional torts. It protects an employee subject to the title, and SDCL 62-3-5 keeps a non-complying private employer from ever being deemed to have accepted it.

SDCL 62-3-11 then hands the choice to the injured worker or the dependents of a worker who died. They may proceed against the employer in an ordinary action at law for damages, or proceed in circuit court under the title exactly as if the employer had elected coverage.

The second option is the one that gets underestimated. The measure of benefits is the medical care required by SDCL 62-4-1 plus twice the amount of the other compensation the title allows, so every disability payment that would have been owed under a policy is doubled and paid out of the company's own account.

The paperwork penalties are separate and they apply to anyone inside the system. Failing to file the report within seven days is a Class 2 misdemeanor plus a one hundred dollar administrative fine under SDCL 62-6-2. Failing to complete or maintain the injury record is a Class 2 misdemeanor under SDCL 62-6-1.

South Dakota sets those numbers in SDCL 22-6-2: a Class 2 misdemeanor carries up to thirty days in a county jail or a five hundred dollar fine or both. Insurers and self-insurers face a matching one hundred dollar fine per act of noncompliance with SDCL 62-6-3, and a certificate of authority can be suspended, revoked or refused renewal.

Two more exposures round it out. SDCL 62-1-16 makes an employer civilly liable for wrongful discharge if it fires an employee in retaliation for filing a lawful claim, with the burden on the employee to prove it. SDCL 62-1-17 prohibits refusing to hire someone because of a preexisting injury.

What to Do the Day Someone Gets Hurt

Treatment first, then the record, then the report, all inside the same week. The order below assumes you carry coverage, with the divergence for an uninsured employer flagged at the end.

Recordkeeping is where this either goes smoothly or does not. The injury log required by Title 62 is not the federal log, so keep both, and the mechanics of the federal one live in the guide to OSHA forms 300 and 301. Onboarding records are the cheapest evidence you will ever collect.

One habit closes the loop. Keep whatever you told each employee about coverage in the same file as the I-9 and the W-4, because in a dispute the question is never whether a poster existed but what this particular person was handed and when. The broader picture sits in the South Dakota compliance guide.

Wage questions belong somewhere else entirely. Rates, tipped credit and the annual indexed increase are covered on the South Dakota minimum wage page, and the Division of Labor and Management in Pierre answers operational workers compensation questions by phone faster than most brokers will.

Frequently Asked Questions

Is workers' compensation insurance required in South Dakota?

No. The Department of Labor and Regulation states that there is no law in South Dakota requiring any employer to carry workers compensation insurance, and that an uninsured employer may be sued in civil court by an injured worker. No headcount changes the answer. SDCL 62-5-1 tells an employer inside the compensation provisions to secure payment by insurance or self-insurance, and SDCL 62-5-7 treats a failure to do so as an election not to operate under the title rather than as a violation.

What happens to a South Dakota employer that goes without coverage?

Nothing until someone is hurt, and then a great deal. There is no uninsured employer fine, no stop-work order and no criminal charge. What disappears is the exclusive remedy, because SDCL 62-3-5 stops a non-complying private employer from ever being deemed to have accepted the title. SDCL 62-3-11 then lets the injured worker choose an ordinary damages suit or a proceeding under the title measured as medical care plus twice the other compensation, though never both.

Who is exempt from South Dakota workers' compensation?

Domestic servants working twenty hours or less in a calendar week or six weeks or less in any thirteen-week period, farm and agricultural laborers, and work activity participants, all under SDCL 62-3-15. SDCL 62-1-3 adds anyone whose work is outside the usual course of the employer's trade or business, along with officials elected or appointed to a regular term. An employer may still bring excluded workers inside the title by voluntarily insuring the liability under SDCL 62-3-17.

Are corporate officers and owners covered in South Dakota?

Officers are covered by default, owners are not. SDCL 62-1-7 makes every duly elected or appointed executive officer of a corporation an employee, with nonprofit corporations carved out and their officers covered only if specifically included. Rejecting that status takes written notice served on the corporation more than thirty days before the injury under SDCL 62-3-5.1. A sole proprietor is not an employee of the business, but SDCL 58-20-3 lets a carrier write a policy covering an owner performing labor incidental to the occupation.

How fast must a work injury be reported in South Dakota?

The employee gives written notice within three business days under SDCL 62-7-10, and the employer files within seven calendar days under SDCL 62-6-2, excluding Sundays and legal holidays. Late employee notice bars the claim only if the employer lacked actual knowledge and the employee lacked good cause, which the statute says to construe liberally for the employee. Your own filing obligation runs from the day you learn of the injury, whether or not written notice ever arrived.

What are the penalties for not filing a First Report of Injury?

A Class 2 misdemeanor and a one hundred dollar administrative fine under SDCL 62-6-2, absent good cause. Failing to complete or maintain the injury record required by SDCL 62-6-1 is a separate Class 2 misdemeanor. Under SDCL 22-6-2 a Class 2 misdemeanor carries up to thirty days in a county jail or a five hundred dollar fine or both. It is worth noticing that the paperwork carries a criminal classification while going entirely without coverage does not.

Where does a South Dakota employer buy workers' compensation insurance?

From a licensed carrier, a mutual employer's liability association, or an authorized reciprocal or interinsurance association, under SDCL 62-5-2 and 62-5-3. There is no state fund and the state is not monopolistic, so employer's liability protection comes inside the ordinary policy. Employers who cannot get a quote use the assigned risk plan whose instructions the Division of Insurance publishes. Self-insurance under SDCL 62-5-5 exists but demands annual proof of solvency, a security deposit and an application fee.

Does a South Dakota employer have to post anything about workers' compensation?

Yes, a safety posting under SDCL 62-2-11, displayed in visible locations throughout the premises. The department says South Dakota law requires only two workplace postings in total, that one and the reemployment assistance notice. No format is prescribed for the safety poster and the department publishes free versions. Nothing in Title 62 requires a pamphlet or a written coverage notice at hire, so telling new employees where you stand is a choice rather than a duty.