South Dakota workers comp requirements decide exactly when an employer must carry coverage, who counts toward the threshold, and the penalty for going without. This guide breaks down the South Dakota workers comp requirements in plain English. (Injured instead of hiring? See our South Dakota settlement and claim guides linked below.) All figures are from South Dakota sources, verified as of June 2026.
South Dakota at a Glance
| Required at | N/A — no employee count triggers a mandate; there is no threshold because coverage is not required even with 1 or more employees employee(s) |
| Which workers count | There is no mandatory threshold and no special construction-from-first-employee rule, because coverage is optional for all private employers; if an employer voluntarily carries coverage, full-time, part-time, and seasonal workers generally count, while statutorily excluded classes (below) do not |
| Who is exempt | Even when an employer opts in, excluded/exempt classes generally include domestic servants (unless they work more than 20 hours in a calendar week and more than six weeks in any 13-week period), farm/agricultural laborers, and certified independent contractors; sole proprietors and partners are excluded by default |
| Penalty for going without | No statutory fine or per-day/per-employee penalty for not carrying coverage, because coverage is not required; however an uninsured employer loses statutory immunity and may be sued in circuit court (exposure to enhanced/”double” workers’-comp-style benefits or a tort action). Separately, failing to report a known work injury/illness within seven days is a Class 2 misdemeanor carrying a 100 civil penalty assessed by the Department of Labor and Regulation |
| Monopolistic state? | No — private carriers |
In This South Dakota Guide:
Is Workers’ Comp Required in South Dakota?
No — South Dakota does not require employers to carry workers’ compensation insurance at any point; coverage is voluntary regardless of how many employees you have (South Dakota and Texas are the only two states where it is not mandatory).
South Dakota Workers’ Comp Requirements at a Glance
Here are the exact South Dakota workers comp requirements every employer should know:
| Employees that trigger the mandate | N/A — no employee count triggers a mandate; there is no threshold because coverage is not required even with 1 or more employees |
| Which workers count | There is no mandatory threshold and no special construction-from-first-employee rule, because coverage is optional for all private employers; if an employer voluntarily carries coverage, full-time, part-time, and seasonal workers generally count, while statutorily excluded classes (below) do not |
| Who is exempt | Even when an employer opts in, excluded/exempt classes generally include domestic servants (unless they work more than 20 hours in a calendar week and more than six weeks in any 13-week period), farm/agricultural laborers, and certified independent contractors; sole proprietors and partners are excluded by default |
| Owners & officers | Sole proprietors and partners are excluded but may elect to be covered (with a set minimum payroll for rating); corporate officers are included by default but may elect to be exempt — confirm current election forms with the SD Division of Labor and Management |
| Penalty for going without | No statutory fine or per-day/per-employee penalty for not carrying coverage, because coverage is not required; however an uninsured employer loses statutory immunity and may be sued in circuit court (exposure to enhanced/”double” workers’-comp-style benefits or a tort action). Separately, failing to report a known work injury/illness within seven days is a Class 2 misdemeanor carrying a 100 civil penalty assessed by the Department of Labor and Regulation |
| Monopolistic state? | No — buy from private carriers |
| State fund | NONE — South Dakota has no state-run or competitive state workers’-comp fund |
How to Get Workers’ Comp Coverage in South Dakota
Employers that choose to carry coverage buy a policy from a private/admitted insurance carrier; those unable to obtain voluntary coverage can use the NCCI-administered assigned-risk (residual) market — confirm with the SD Division of Labor and Management
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.
Employees vs. Independent Contractors in South Dakota
The most common way employers get the South Dakota workers comp 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: Workers’ comp is optional (only South Dakota and Texas); an uninsured employer forfeits exclusive-remedy immunity and can be sued in circuit court; independent contractors may be certified as exempt by the Department of Labor and Regulation; domestic and agricultural labor are excluded classes; work injuries should be reported within seven days (late reporting is a Class 2 misdemeanor, 100 civil penalty).
Many claimants and employers should confirm current rules and figures with the South Dakota Division of Labor and Management (605.773.3681) and a licensed attorney.
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Understanding South Dakota Workers Comp Requirements
The South Dakota workers comp requirements exist so injured employees get care and lost wages without having to sue. For most employers, the South Dakota workers comp 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 comp 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 comp requirements is unclear, your state board can confirm the threshold, the exemptions, and how to get covered.
Need to get covered? If you are an employer in South Dakota shopping for a policy, our sister site compares small-business insurance, including workers’ comp. Compare business insurance options →
Frequently Asked Questions
Is workers’ comp required in South Dakota?
No — South Dakota does not require employers to carry workers’ compensation insurance at any point; coverage is voluntary regardless of how many employees you have (South Dakota and Texas are the only two states where it is not mandatory).
What is the penalty for not having workers’ comp in South Dakota?
No statutory fine or per-day/per-employee penalty for not carrying coverage, because coverage is not required; however an uninsured employer loses statutory immunity and may be sued in circuit court (exposure to enhanced/”double” workers’-comp-style benefits or a tort action). Separately, failing to report a known work injury/illness within seven days is a Class 2 misdemeanor carrying a 100 civil penalty assessed by the Department of Labor and Regulation
Who is exempt from South Dakota workers’ comp?
Even when an employer opts in, excluded/exempt classes generally include domestic servants (unless they work more than 20 hours in a calendar week and more than six weeks in any 13-week period), farm/agricultural laborers, and certified independent contractors; sole proprietors and partners are excluded by default
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/62-1
- U.S. Department of Labor — Workers’ Comp: dol.gov
- Insurance Information Institute: iii.org
These South Dakota workers comp 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 Workers’ Comp Guides
- South Dakota Workers’ Comp Settlements
- How to File a South Dakota Workers’ Comp Claim
- Workers’ Comp Guides for All 50 States
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.