A Minnesota workers comp exemption lets certain business owners legally go without workers’ compensation coverage on themselves — Sole proprietors, partners, some executive officers and some LLC managers are excluded from coverage automatically. They don’t file anything to opt out, and any of them may choose to buy coverage instead.
Sole proprietors and partners are excluded, along with their spouse, parent and child of any age who work in the business. An executive officer of a family farm corporation is excluded.
An executive officer of a closely held corporation is excluded if the corporation has 10 or fewer stockholders and had less than 22880 hours of payroll in the preceding calendar year, and the officer owns at least 25 percent of the stock.
An LLC manager is excluded if the LLC has 10 or fewer members and had less than 22880 hours of payroll in the preceding calendar year, and the manager owns at least a 25 percent membership interest. There is no limit on the number of officers. Confirm with DLI and a licensed attorney. — while the law still requires coverage for employees once a business has 1 or more.
This guide explains who qualifies for the Minnesota workers comp exemption, the exact form, where to file it, what it costs, and what an exempt owner gives up. Verified against Minnesota sources as of October 2026.
Minnesota at a Glance
| Coverage required at | 1 employee(s) |
| Who may elect out | Sole proprietors, partners, some executive officers and some LLC managers are excluded from coverage automatically. They don’t file anything to opt out, and any of them may choose to buy coverage instead. Sole proprietors and partners are excluded, along with their spouse, parent and child of any age who work in the business. An executive officer of a family farm corporation is excluded. An executive officer of a closely held corporation is excluded if the corporation has 10 or fewer stockholders and had less than 22880 hours of payroll in the preceding calendar year, and the officer owns at least 25 percent of the stock. An LLC manager is excluded if the LLC has 10 or fewer members and had less than 22880 hours of payroll in the preceding calendar year, and the manager owns at least a 25 percent membership interest. There is no limit on the number of officers. Confirm with DLI and a licensed attorney. |
| Exemption form | The owner exclusions need no form; they apply automatically. The form DLI publishes is SF0138, “Election to Exclude Certain Relatives of Executive Officers of a Closely Held Corporation.” It is used to exclude employees related within the third degree to an officer who owns at least 25 percent of the stock. Search results also list DLI form SF0137 as the matching form for relatives of LLC managers (“Election to Exclude Relatives of Managers of a Limited Liability Company”). An owner who chooses to be covered tells the insurer in writing; there is no state form for that. |
| Filed with | SF0138 is filed with the Minnesota Department of Labor and Industry, Workers’ Compensation Division – SCF, 443 Lafayette Road N., St. Paul, MN 55155. The exclusion takes effect on the date DLI receives the form. If any information on it changes, the form must be refiled with DLI and with the workers’ comp insurer, if there is one. Forms are at https://www.dli.mn.gov/business/workers-compensation/work-comp-forms. A choice to be covered, or to end that coverage, is sent in writing to the insurer. |
| Renewal | There is no set expiration. The owner exclusions apply automatically while the business meets the requirements, including the 22880 payroll-hour limit for the preceding calendar year, so whether a business qualifies can change from year to year. SF0138 must be refiled if any of its information changes. |
| Penalty for being uninsured | Under Minn. Stat. § 176.181, subd. 3, the DLI commissioner may order the employer to get insurance, stop employing anyone without coverage, and pay a penalty of up to 1000 for each employee for each week they were uninsured. The employer has 10 days to comply with or contest the order. An uncontested order becomes final and can be enforced through civil contempt. Penalties become a lien on the employer’s property. Willful and intentional failure to insure is a gross misdemeanor under § 176.181, subd. 4. |
In This Minnesota Guide:
Who Qualifies for A Minnesota Workers Comp Exemption
Sole proprietors, partners, some executive officers and some LLC managers are excluded from coverage automatically. They don’t file anything to opt out, and any of them may choose to buy coverage instead. Sole proprietors and partners are excluded, along with their spouse, parent and child of any age who work in the business. An executive officer of a family farm corporation is excluded.
An executive officer of a closely held corporation is excluded if the corporation has 10 or fewer stockholders and had less than 22880 hours of payroll in the preceding calendar year, and the officer owns at least 25 percent of the stock.
An LLC manager is excluded if the LLC has 10 or fewer members and had less than 22880 hours of payroll in the preceding calendar year, and the manager owns at least a 25 percent membership interest. There is no limit on the number of officers. Confirm with DLI and a licensed attorney.
Minn. Stat. § 176.041, subd. 1. An executive officer of a closely held corporation (stock held by no more than 10 persons) is excluded from coverage if the corporation had less than 22880 hours of payroll in the preceding calendar year and the officer owns at least 25 percent of the stock. The officer’s spouse, parent and child of any age are also excluded.
Other employees related to that officer by blood or marriage within the third degree of kindred are excluded only if the corporation files a written election with the commissioner. Executive officers of family farm corporations are also excluded. The corporation may choose to cover an excluded officer by giving written notice to its insurer.
Minn. Stat. § 176.041, subd. 1. Partners in a business or farm are excluded automatically, along with their spouse, parent and child of any age. A partnership may choose to cover any partner. An LLC manager is excluded if the LLC has 10 or fewer members, had less than 22880 hours of payroll in the preceding calendar year, and the manager owns at least a 25 percent membership interest.
That manager’s spouse, parent and child are also excluded. Other relatives within the third degree of kindred are excluded only if the LLC files a written election with the commissioner. The LLC may choose to cover a qualifying manager by giving written notice to its insurer.
How to File the Minnesota Workers Comp Exemption
The form is The owner exclusions need no form; they apply automatically. The form DLI publishes is SF0138, “Election to Exclude Certain Relatives of Executive Officers of a Closely Held Corporation.” It is used to exclude employees related within the third degree to an officer who owns at least 25 percent of the stock.
Search results also list DLI form SF0137 as the matching form for relatives of LLC managers (“Election to Exclude Relatives of Managers of a Limited Liability Company”). An owner who chooses to be covered tells the insurer in writing; there is no state form for that..
It is filed with SF0138 is filed with the Minnesota Department of Labor and Industry, Workers’ Compensation Division – SCF, 443 Lafayette Road N., St. Paul, MN 55155. The exclusion takes effect on the date DLI receives the form. If any information on it changes, the form must be refiled with DLI and with the workers’ comp insurer, if there is one. Forms are at https://www.dli.mn.gov/business/workers-compensation/work-comp-forms.
A choice to be covered, or to end that coverage, is sent in writing to the insurer.. Renewal: There is no set expiration. The owner exclusions apply automatically while the business meets the requirements, including the 22880 payroll-hour limit for the preceding calendar year, so whether a business qualifies can change from year to year. SF0138 must be refiled if any of its information changes..
Filing on the state’s own site costs nothing beyond any statutory fee — the “exemption filing services” that advertise on this search charge for the same form.
Minnesota Workers Comp Exemption Rules at a Glance
The exact Minnesota workers comp exemption rules every owner should check before deciding to go without coverage:
| Employee threshold | 1 |
| Who may elect out | Sole proprietors, partners, some executive officers and some LLC managers are excluded from coverage automatically. They don’t file anything to opt out, and any of them may choose to buy coverage instead. Sole proprietors and partners are excluded, along with their spouse, parent and child of any age who work in the business. An executive officer of a family farm corporation is excluded. An executive officer of a closely held corporation is excluded if the corporation has 10 or fewer stockholders and had less than 22880 hours of payroll in the preceding calendar year, and the officer owns at least 25 percent of the stock. An LLC manager is excluded if the LLC has 10 or fewer members and had less than 22880 hours of payroll in the preceding calendar year, and the manager owns at least a 25 percent membership interest. There is no limit on the number of officers. Confirm with DLI and a licensed attorney. |
| Corporate officers | Minn. Stat. § 176.041, subd. 1. An executive officer of a closely held corporation (stock held by no more than 10 persons) is excluded from coverage if the corporation had less than 22880 hours of payroll in the preceding calendar year and the officer owns at least 25 percent of the stock. The officer’s spouse, parent and child of any age are also excluded. Other employees related to that officer by blood or marriage within the third degree of kindred are excluded only if the corporation files a written election with the commissioner. Executive officers of family farm corporations are also excluded. The corporation may choose to cover an excluded officer by giving written notice to its insurer. |
| LLC members and partners | Minn. Stat. § 176.041, subd. 1. Partners in a business or farm are excluded automatically, along with their spouse, parent and child of any age. A partnership may choose to cover any partner. An LLC manager is excluded if the LLC has 10 or fewer members, had less than 22880 hours of payroll in the preceding calendar year, and the manager owns at least a 25 percent membership interest. That manager’s spouse, parent and child are also excluded. Other relatives within the third degree of kindred are excluded only if the LLC files a written election with the commissioner. The LLC may choose to cover a qualifying manager by giving written notice to its insurer. |
| Form | The owner exclusions need no form; they apply automatically. The form DLI publishes is SF0138, “Election to Exclude Certain Relatives of Executive Officers of a Closely Held Corporation.” It is used to exclude employees related within the third degree to an officer who owns at least 25 percent of the stock. Search results also list DLI form SF0137 as the matching form for relatives of LLC managers (“Election to Exclude Relatives of Managers of a Limited Liability Company”). An owner who chooses to be covered tells the insurer in writing; there is no state form for that. |
| Where to file | SF0138 is filed with the Minnesota Department of Labor and Industry, Workers’ Compensation Division – SCF, 443 Lafayette Road N., St. Paul, MN 55155. The exclusion takes effect on the date DLI receives the form. If any information on it changes, the form must be refiled with DLI and with the workers’ comp insurer, if there is one. Forms are at https://www.dli.mn.gov/business/workers-compensation/work-comp-forms. A choice to be covered, or to end that coverage, is sent in writing to the insurer. |
| Renewal | There is no set expiration. The owner exclusions apply automatically while the business meets the requirements, including the 22880 payroll-hour limit for the preceding calendar year, so whether a business qualifies can change from year to year. SF0138 must be refiled if any of its information changes. |
What A Minnesota Workers Comp Exemption Gives Up
An excluded owner or relative generally gets no Minnesota workers’ comp benefits if injured on the job: no wage-loss, medical or disability benefits through the employer’s policy unless the business chose to cover them. What this does to the right to sue depends on the facts; confirm with DLI and a licensed attorney.
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One honest paragraph on the “ghost policy”: a minimum-premium policy with no employees sold to owners who need a certificate of insurance. It is legal in many states, but it is not a Minnesota workers comp exemption — it is coverage with nobody on it. If you add a worker, it must be reported, or the audit will find them.
Workers Exempt by Law in Minnesota
Separate from the owner’s election, Minnesota law exempts some classes of workers from coverage — commonly domestic workers below a threshold, casual labor, some farm labor and licensed real-estate agents paid by commission. A worker who does not fit a listed class counts toward the threshold, no matter what the 1099 says.
Proving A Minnesota Workers Comp Exemption or Coverage
General contractors and clients in Minnesota ask for proof before work starts: a certificate of insurance for covered employers, or the filed exemption certificate for exempt owners. Many states also run a public coverage-verification lookup on the agency site.
Why the Minnesota Workers Comp Exemption Matters
The Minnesota workers comp exemption is a trade: lower cost today against no safety net if you are hurt. The second half of the trade is the one the search results never lead with. Minnesota limits officer and LLC-manager exclusions to businesses with less than 22880 hours of payroll in the preceding calendar year (roughly 11 full-time workers).
Relatives within the third degree of kindred (such as siblings, grandchildren, nieces, nephews, uncles and aunts) can be excluded only by filing a written election with DLI. Spouses, parents and children are excluded automatically. Not appearing in the DLI lookup does not prove an employer lacks coverage.
If the Minnesota workers comp exemption rules above leave any doubt about whether a worker counts, ask the state agency before you decide — the answer is free, and the penalty for guessing wrong is not.
Employer side: the Minnesota requirements guide covers the threshold, who counts and the penalties in full. Hurt while exempt? You may still have a claim against a third party — a licensed attorney can say.
Frequently Asked Questions
Who can file a workers comp exemption in Minnesota?
Sole proprietors, partners, some executive officers and some LLC managers are excluded from coverage automatically. They don’t file anything to opt out, and any of them may choose to buy coverage instead. Sole proprietors and partners are excluded, along with their spouse, parent and child of any age who work in the business. An executive officer of a family farm corporation is excluded.
An executive officer of a closely held corporation is excluded if the corporation has 10 or fewer stockholders and had less than 22880 hours of payroll in the preceding calendar year, and the officer owns at least 25 percent of the stock.
An LLC manager is excluded if the LLC has 10 or fewer members and had less than 22880 hours of payroll in the preceding calendar year, and the manager owns at least a 25 percent membership interest. There is no limit on the number of officers. Confirm with DLI and a licensed attorney.
What form is the Minnesota workers comp exemption?
The owner exclusions need no form; they apply automatically. The form DLI publishes is SF0138, “Election to Exclude Certain Relatives of Executive Officers of a Closely Held Corporation.” It is used to exclude employees related within the third degree to an officer who owns at least 25 percent of the stock.
Search results also list DLI form SF0137 as the matching form for relatives of LLC managers (“Election to Exclude Relatives of Managers of a Limited Liability Company”). An owner who chooses to be covered tells the insurer in writing; there is no state form for that.. File it on the state’s own site; filing services charge for the same form.
Can an exempt owner in Minnesota still collect benefits if hurt?
No. An exemption removes the owner from coverage, so there is no claim for medical care or lost wages. That is the trade.
Official Minnesota Sources & Resources
- Minnesota Minnesota Department of Labor and Industry (DLI), Workers’ Compensation Division: https://www.dli.mn.gov/business/workers-compensation
- Minnesota Workers’ Comp Statute: https://www.revisor.mn.gov/statutes/cite/176.041
- U.S. Department of Labor — Workers’ Comp: dol.gov
- Insurance Information Institute: iii.org
This Minnesota workers comp exemption guide was last verified against official Minnesota sources in October 2026. Rules change — confirm the current figure with the state agency or a licensed attorney.
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Disclaimer: This guide is informational only and is not legal, medical, or financial advice. Workers Comp Explained is an independent educational resource, not a law firm or insurer. Workers’ comp benefits, settlement values, deadlines, and requirements vary by state and by the specific facts of your injury and change over time, and any settlement figures here are illustrative only.
Confirm your rights and any deadline with your state’s workers’ compensation board and a licensed attorney before you act.