Is Workers' Comp Required in South Dakota?

Short answer: No law in South Dakota requires an employer to carry workers' comp, according to the state Department of Labor and Regulation, which still highly recommends it. The catch: an uninsured employer loses the law's protections. An injured worker can sue for damages, or claim benefits in circuit court at medical costs plus twice the usual compensation.

The official position

The South Dakota Department of Labor and Regulation (DLR) states it directly: "There is no law in South Dakota requiring any employer to carry workers' compensation insurance. However, it is highly recommended. An uninsured employer may be sued in civil court by an injured worker."

But "not required" doesn't mean "no consequences," as the statutes show.

How the law is built

South Dakota's system works through presumption and election:

1. Everyone is presumed in. Under SDCL 62-3-3, every employer and employee is presumed to have accepted the workers' compensation title.
2. But acceptance requires security. SDCL 62-3-5 says no private employer is deemed to have accepted unless it has secured payment of compensation under 62-5-1 to 62-5-5.
3. No security means you've opted out. Under SDCL 62-5-7, an employer that hasn't secured payment is deemed to have elected not to operate under the title.

What opting out costs

SDCL 62-3-11 gives the injured employee of an uninsured employer, or the dependents of a worker who died, a choice:

• Sue at law for damages for the injury or death; or
• Proceed in circuit court under the workers' comp title as if the employer had coverage. The measure of benefits is medical benefits plus twice the other compensation the title allows.

The worker can't recover from both. Either way, the employer pays out of pocket. Compare that with SDCL 62-3-2: for a covered employer, workers' comp is the employee's exclusive remedy, except for intentional torts. Officers, directors and co-employees share that protection.

How to secure coverage

Under SDCL 62-5-1, an employer coming under the title secures payment in one of the authorized ways:

• Insurance with an insurer authorized to write workers' comp in South Dakota (SDCL 62-5-2).
• Self-insurance, by furnishing annual proof of solvency and financial ability to DLR, with an application fee of up to $2,500 (SDCL 62-5-5).

Who's outside the law entirely

DLR's coverage page lists the exceptions:

• Domestic servants, unless they work more than 20 hours in a calendar week for more than six weeks in any 13-week period.
• Farm or agricultural labor.
• Work outside the employer's usual trade or business, including independent contractors such as real estate agents and truck owner-operators certified by DLR.
• Certain elected officials.
• Workfare participants.

Corporate officers

SDCL 62-1-7 makes every elected or appointed executive officer of a for-profit corporation an employee for workers' comp purposes. An officer who doesn't want coverage can reject it under SDCL 62-3-5.1 by serving written notice on the corporation, in person or by certified mail, at the time of election or appointment, or more than 30 days before an injury. The rejection can be withdrawn the same way.

General contractors, take note

Under SDCL 62-3-10, a principal or intermediate contractor is liable for compensation to a subcontractor's injured employee, to the same extent as the immediate employer, when the injury happens on premises the principal contractor controls. Claims go first against the immediate employer. Collect certificates of insurance from subs.

Duties once you're covered

From DLR's employer rights and responsibilities page:

• Employees should give written notice of an injury within three business days, or as soon as practicable.
• You must file the First Report of Injury with your insurer within seven days, excluding Sundays and holidays, of learning about it. Missing that deadline can mean a Class 2 misdemeanor and a $100 civil penalty.
• The employee makes the first choice of medical practitioner. An ER visit doesn't count as that choice.
• Temporary total disability benefits begin when the worker can't work for at least seven consecutive days.
• The insurer, not the employer, decides whether a claim is compensable.

Bottom line

South Dakota lets employers go without workers' comp, but then a lawsuit or a double-compensation claim takes its place. Coverage buys predictability. Read our workers' compensation insurance guide.

Contact Alishahi Insurance or call (877) 711-4545. Explore insurance in South Dakota.

Frequently asked questions

Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.