A South Dakota workers comp exemption lets certain business owners legally go without workers’ compensation coverage on themselves — Sole proprietors and partners are not “employees” under SDCL 62-1-3, so they are outside coverage unless they buy a policy to cover themselves (SDCL 58-20-3, referenced in SDCL 62-1-2 and 62-1-3). Executive officers of for-profit corporations are employees by default (SDCL 62-1-7).
They may reject coverage by written notice to the corporation (SDCL 62-3-5.1). No ownership-percentage or officer-count limit appears in the statute. Independent contractors who are not employers or general contractors may sign an Affidavit of Exempt Status (SDCL 62-1-19). — while the law still requires coverage for employees once a business has NONE.
On its workers’ comp page, the South Dakota Department of Labor and Regulation says “There is no law in South Dakota requiring any employer to carry workers’ compensation insurance.” Coverage is elective. An employer that has not secured coverage “shall be deemed to have elected not to operate under the provisions of this title” (SDCL 62-5-7). That employer gives up the protections of the workers’ comp law (see uninsured_penalty).
There is no employee-count trigger. or more. This guide explains who qualifies for the South Dakota workers comp exemption, the exact form, where to file it, what it costs, and what an exempt owner gives up. Verified against South Dakota sources as of October 2026.
South Dakota at a Glance
| Coverage required at | NONE. On its workers’ comp page, the South Dakota Department of Labor and Regulation says “There is no law in South Dakota requiring any employer to carry workers’ compensation insurance.” Coverage is elective. An employer that has not secured coverage “shall be deemed to have elected not to operate under the provisions of this title” (SDCL 62-5-7). That employer gives up the protections of the workers’ comp law (see uninsured_penalty). There is no employee-count trigger. employee(s) |
| Who may elect out | Sole proprietors and partners are not “employees” under SDCL 62-1-3, so they are outside coverage unless they buy a policy to cover themselves (SDCL 58-20-3, referenced in SDCL 62-1-2 and 62-1-3). Executive officers of for-profit corporations are employees by default (SDCL 62-1-7). They may reject coverage by written notice to the corporation (SDCL 62-3-5.1). No ownership-percentage or officer-count limit appears in the statute. Independent contractors who are not employers or general contractors may sign an Affidavit of Exempt Status (SDCL 62-1-19). |
| Exemption form | The officer rejection has no state form; it is a written notice served on the corporation (SDCL 62-3-5.1). Independent contractors use the “Affidavit of Exempt Status” plus the attached “Exempt Status Fact Sheet” (SDCL 62-1-20; ARSD 47:03:10, Appendix A and B). The affidavit must be notarized. Truck owner-operators use the “Independent Contractor Verification Application” (DLR, ARSD 47:03:07). |
| Filed with | Officer rejection notice: served on the corporation itself, personally or by certified mail; no state filing (SDCL 62-3-5.1). Affidavit of Exempt Status: not filed with the state. Both the independent contractor and the general contractor sign it before work starts, and each keeps a copy (ARSD 47:03:10:01). The general contractor sends copies to its own workers’ comp insurer (ARSD 47:03:10:02). Form: https://dlr.sd.gov/insurance/workers_compensation/documents/independent_contractor_affidavit_of_exempt_status_and_fact_sheet.pdf. Owner-operator certification: filed with DLR, which decides within 30 days (SDCL 62-1-12). Details: https://dlr.sd.gov/workers_compensation/coverage_independent_contractor.aspx |
| Filing fee | $0. No state filing fee appears in statute or rule for the officer notice or the affidavit. Notary fees may apply. |
| Renewal | Officer rejection lasts until withdrawn by written notice served more than 30 days before an injury (SDCL 62-3-5.1). The Affidavit of Exempt Status names one general contractor and one calendar year, and must be completed before work begins on the project named in it (ARSD 47:03:10:01). In practice, a new affidavit is needed for each contractor and year. An owner-operator certificate stays binding while circumstances do not change (SDCL 62-1-12). |
| Penalty for being uninsured | No criminal penalty or fine for going uninsured was found in Title 62. An employer without coverage “shall be deemed to have elected not to operate under” the workers’ comp law (SDCL 62-5-7). An injured employee of that employer may choose one of two options (SDCL 62-3-11): (1) sue the employer in civil court for damages; or (2) proceed in circuit court under the workers’ comp law and recover medical benefits (SDCL 62-4-1) plus twice the other compensation the law allows. The employee may not recover from both. Under SDCL 62-3-10, a general contractor can be liable to an uninsured subcontractor’s injured employees. DLR’s site says an uninsured employer “may be sued in civil court by an injured worker.” |
In This South Dakota Guide:
Who Qualifies for A South Dakota Workers Comp Exemption
Sole proprietors and partners are not “employees” under SDCL 62-1-3, so they are outside coverage unless they buy a policy to cover themselves (SDCL 58-20-3, referenced in SDCL 62-1-2 and 62-1-3). Executive officers of for-profit corporations are employees by default (SDCL 62-1-7). They may reject coverage by written notice to the corporation (SDCL 62-3-5.1). No ownership-percentage or officer-count limit appears in the statute.
Independent contractors who are not employers or general contractors may sign an Affidavit of Exempt Status (SDCL 62-1-19).
SDCL 62-1-7 makes every elected or appointed executive officer of a for-profit corporation an employee. Under SDCL 62-3-5.1, an officer may reject coverage by serving written notice of election to reject on the corporation, either personally or by certified mail. The notice must be served at the time of election or appointment, or more than 30 days before an injury or death (or 30 days before contracting an occupational disease).
A rejection may be withdrawn the same way and on the same 30-day timing. Nonprofit corporations may choose to cover their executive officers by naming them in the policy (SDCL 62-1-8).
How to File the South Dakota Workers Comp Exemption
The form is The officer rejection has no state form; it is a written notice served on the corporation (SDCL 62-3-5.1). Independent contractors use the “Affidavit of Exempt Status” plus the attached “Exempt Status Fact Sheet” (SDCL 62-1-20; ARSD 47:03:10, Appendix A and B). The affidavit must be notarized. Truck owner-operators use the “Independent Contractor Verification Application” (DLR, ARSD 47:03:07)..
It is filed with Officer rejection notice: served on the corporation itself, personally or by certified mail; no state filing (SDCL 62-3-5.1). Affidavit of Exempt Status: not filed with the state. Both the independent contractor and the general contractor sign it before work starts, and each keeps a copy (ARSD 47:03:10:01). The general contractor sends copies to its own workers’ comp insurer (ARSD 47:03:10:02). Form: https://dlr.sd.gov/insurance/workers_compensation/documents/independent_contractor_affidavit_of_exempt_status_and_fact_sheet.pdf.
Owner-operator certification: filed with DLR, which decides within 30 days (SDCL 62-1-12). Details: https://dlr.sd.gov/workers_compensation/coverage_independent_contractor.aspx. The fee is $0. No state filing fee appears in statute or rule for the officer notice or the affidavit. Notary fees may apply.. Renewal: Officer rejection lasts until withdrawn by written notice served more than 30 days before an injury (SDCL 62-3-5.1).
The Affidavit of Exempt Status names one general contractor and one calendar year, and must be completed before work begins on the project named in it (ARSD 47:03:10:01). In practice, a new affidavit is needed for each contractor and year. An owner-operator certificate stays binding while circumstances do not change (SDCL 62-1-12)..
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.
South Dakota Workers Comp Exemption Rules at a Glance
The exact South Dakota workers comp exemption rules every owner should check before deciding to go without coverage:
| Employee threshold | NONE. On its workers’ comp page, the South Dakota Department of Labor and Regulation says “There is no law in South Dakota requiring any employer to carry workers’ compensation insurance.” Coverage is elective. An employer that has not secured coverage “shall be deemed to have elected not to operate under the provisions of this title” (SDCL 62-5-7). That employer gives up the protections of the workers’ comp law (see uninsured_penalty). There is no employee-count trigger. |
| Who may elect out | Sole proprietors and partners are not “employees” under SDCL 62-1-3, so they are outside coverage unless they buy a policy to cover themselves (SDCL 58-20-3, referenced in SDCL 62-1-2 and 62-1-3). Executive officers of for-profit corporations are employees by default (SDCL 62-1-7). They may reject coverage by written notice to the corporation (SDCL 62-3-5.1). No ownership-percentage or officer-count limit appears in the statute. Independent contractors who are not employers or general contractors may sign an Affidavit of Exempt Status (SDCL 62-1-19). |
| Corporate officers | SDCL 62-1-7 makes every elected or appointed executive officer of a for-profit corporation an employee. Under SDCL 62-3-5.1, an officer may reject coverage by serving written notice of election to reject on the corporation, either personally or by certified mail. The notice must be served at the time of election or appointment, or more than 30 days before an injury or death (or 30 days before contracting an occupational disease). A rejection may be withdrawn the same way and on the same 30-day timing. Nonprofit corporations may choose to cover their executive officers by naming them in the policy (SDCL 62-1-8). |
| Form | The officer rejection has no state form; it is a written notice served on the corporation (SDCL 62-3-5.1). Independent contractors use the “Affidavit of Exempt Status” plus the attached “Exempt Status Fact Sheet” (SDCL 62-1-20; ARSD 47:03:10, Appendix A and B). The affidavit must be notarized. Truck owner-operators use the “Independent Contractor Verification Application” (DLR, ARSD 47:03:07). |
| Where to file | Officer rejection notice: served on the corporation itself, personally or by certified mail; no state filing (SDCL 62-3-5.1). Affidavit of Exempt Status: not filed with the state. Both the independent contractor and the general contractor sign it before work starts, and each keeps a copy (ARSD 47:03:10:01). The general contractor sends copies to its own workers’ comp insurer (ARSD 47:03:10:02). Form: https://dlr.sd.gov/insurance/workers_compensation/documents/independent_contractor_affidavit_of_exempt_status_and_fact_sheet.pdf. Owner-operator certification: filed with DLR, which decides within 30 days (SDCL 62-1-12). Details: https://dlr.sd.gov/workers_compensation/coverage_independent_contractor.aspx |
| Fee | $0. No state filing fee appears in statute or rule for the officer notice or the affidavit. Notary fees may apply. |
| Renewal | Officer rejection lasts until withdrawn by written notice served more than 30 days before an injury (SDCL 62-3-5.1). The Affidavit of Exempt Status names one general contractor and one calendar year, and must be completed before work begins on the project named in it (ARSD 47:03:10:01). In practice, a new affidavit is needed for each contractor and year. An owner-operator certificate stays binding while circumstances do not change (SDCL 62-1-12). |
What A South Dakota Workers Comp Exemption Gives Up
An officer who rejects coverage, or a sole proprietor or partner without coverage, is generally not eligible for South Dakota workers’ comp benefits for their own work injury. An Affidavit of Exempt Status signer agrees they “will not be eligible for compensation under the South Dakota Workers’ Compensation Law” (SDCL 62-1-20). The affidavit creates a rebuttable presumption that the signer is not an employee.
The general contractor holding the affidavit is not liable for a workers’ comp claim by the signer or the signer’s subcontractors (SDCL 62-1-19). The signer’s own employees keep their rights. Knowingly giving false information on the affidavit is a Class 2 misdemeanor (SDCL 62-1-21). How a rejection affects the right to sue: confirm with a licensed South Dakota attorney.
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 South Dakota 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.
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Workers Exempt by Law in South Dakota
Separate from the owner’s election, South Dakota 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 South Dakota Workers Comp Exemption or Coverage
General contractors and clients in South Dakota 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 South Dakota Workers Comp Exemption Matters
The South Dakota 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. (1) Coverage is elective: an employer without coverage loses the law’s protections and faces a civil suit or enhanced benefits under SDCL 62-3-11, rather than a state fine.
(2) The independent contractor affidavit is unavailable to anyone who is an employer, a person deemed an employee (including a corporate officer), or a certified owner-operator (ARSD 47:03:10:03; SDCL 62-1-19). (3) Truck owner-operators may get DLR independent contractor certification and may still choose coverage as a sole proprietor or under the motor carrier’s policy if they pay the premium (SDCL 62-1-13).
(4) An employer of domestic or agricultural workers may voluntarily bring them under the law by insuring them (SDCL 62-3-17). Confirm with the South Dakota Division of Labor and Management (605-773-3681) and a licensed attorney.
If the South Dakota 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 South Dakota 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 South Dakota?
Sole proprietors and partners are not “employees” under SDCL 62-1-3, so they are outside coverage unless they buy a policy to cover themselves (SDCL 58-20-3, referenced in SDCL 62-1-2 and 62-1-3). Executive officers of for-profit corporations are employees by default (SDCL 62-1-7). They may reject coverage by written notice to the corporation (SDCL 62-3-5.1). No ownership-percentage or officer-count limit appears in the statute.
Independent contractors who are not employers or general contractors may sign an Affidavit of Exempt Status (SDCL 62-1-19).
What form is the South Dakota workers comp exemption?
The officer rejection has no state form; it is a written notice served on the corporation (SDCL 62-3-5.1). Independent contractors use the “Affidavit of Exempt Status” plus the attached “Exempt Status Fact Sheet” (SDCL 62-1-20; ARSD 47:03:10, Appendix A and B). The affidavit must be notarized. Truck owner-operators use the “Independent Contractor Verification Application” (DLR, ARSD 47:03:07)..
File it on the state’s own site; filing services charge for the same form.
Can an exempt owner in South Dakota 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 South Dakota Sources & Resources
- South Dakota South Dakota Department of Labor and Regulation, Division of Labor and Management (Workers’ Compensation). The Affidavit of Exempt Status form is prescribed by the DLR Division of Insurance (SDCL 62-1-20).: https://dlr.sd.gov/workers_compensation/default.aspx
- South Dakota Workers’ Comp Statute: https://sdlegislature.gov/Statutes/62-3-5.1 (Title 62 index: https://sdlegislature.gov/Statutes/62; DLR law compilation: https://dlr.sd.gov/workers_compensation/publications/wclawguide_book.pdf)
- U.S. Department of Labor — Workers’ Comp: dol.gov
- Insurance Information Institute: iii.org
This South Dakota workers comp exemption guide was last verified against official South Dakota 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.