Nearly every South Dakota employer is required to carry workers’ compensation insurance. The state urges employers to maintain workers’ comp coverage to avoid civil lawsuits.
South Dakota imposes stringent workers’ compensation insurance rules on its employers. All businesses must provide coverage for employers, except those that can qualify for one of the few exceptions.
Generally, the state of South Dakota strives to maintain comprehensive workers’ comp coverage. This means that everyone working in South Dakota must have workers’ comp insurance, except for:
It depends on what type of business owner you are. Here’s how South Dakota business owner requirements work:
Sole proprietors, partners, and members of limited liability companies (LLCs) are excluded from the state’s workers’ comp mandate. However, they can elect to include themselves in their firm’s insurance policy should they find it beneficial.
Corporate officers are expected to have workers’ comp coverage, but they can apply for an exemption.
Forms for electing or rejecting coverage are available at the South Dakota Department of Labor & Regulation.
Certain workers, including owner-operators of commercial motor vehicles and real estate agents, may apply for certification as an independent contractor. If granted this status, employers who retain the services of such individuals do not need to provide them with workers’ comp coverage.
Because the tests for qualifying as an independent contractor are complex, you should review details provided by the South Dakota Department of Labor & Regulation.
South Dakota business owners can compare quotes and purchase a policy from private insurance companies. (Insureon offers the ability to compare quotes for free with its online insurance marketplace.)
If your firm’s high-risk status makes it impossible to purchase workers’ comp insurance through private insurers, you can purchase coverage from the South Dakota assigned risk market. The National Council on Compensation Insurance (NCCI) manages this insurance pool, serving as the state’s workers’ comp provider of last resort.
South Dakota employers who qualify can self-insure their workers’ compensation claims. This means they’ll pay for their own workers’ comp claims rather than submit them to an insurance company.
To qualify for self-insurance, they must file an application with the South Dakota Department of Labor & Regulation and submit a security form, a $2,250 application, fee, and their last four years of annual reports.
The estimated workers’ comp expense for South Dakota employers is $1.21 per $100 in covered payroll, according to the National Academy of Social Insurance [PDF].
Violating South Dakota’s workers’ compensation statute is a serious matter. If you fail to comply, you may open yourself to legal action from injured or sick employees or their survivors. If they decide to sue you, they will be allowed to do so for all applicable medical expenses incurred due to the incident, plus twice the amount of disability-income or death benefits allowed under South Dakota law.
South Dakota mandates the payment of death benefits to the survivors of an employee who dies from a work-related injury or illnesses. These take the form of payments to replace the worker’s lost income and to cover burial-related expenses.
If the employee’s death resulted from a work injury, the person’s spouse is eligible to receive 67% of the employee's average weekly wage (overtime included at the straight rate). If the spouse gets remarried, the workers’ comp insurer will pay a lump sum equaling two years of the worker’s pay.
If there are eligible surviving children of the employee, the income benefit to them will begin two years after the surviving spouse remarries.
If the only survivors are children, the child or children will receive income payments equal to 67% of the deceased employee’s average weekly wage until they reach age 18 (or age 22 if enrolled full-time in school). Children who are physically or mentally incapable of self-support will receive payments for the rest of their lives.
The insurer will pay an additional $50 per month to each legally dependent child of the deceased employee from the date of the employee's death until that child turns 18. The insurer must also pay an additional $2,000 per year for up to five years for each child enrolled full-time at an accredited South Dakota post-secondary educational institution.
In addition to paying survivor income benefits, workers’ comp insurers must pay for up to $10,000 in burial expenses, plus the cost of transporting the body if death occurs outside the burial community.
In South Dakota, many workers’ comp claims end in settlements. This means the parties to the claim – the injured employee, the company, and the insurer – must agree on a lump-sum payment in return for the employee (or the employee’s survivors) agreeing to forgo future payments.
The South Dakota Department of Labor & Regulation must approve all workers’ comp settlements. Your workers’ comp insurer and the employee must file settlement paperwork with the department. If the department doesn’t respond within 20 days by sending an official disapproval notice, the settlement will be considered approved. Once a settlement application is approved in South Dakota, it’s a final decision.
In South Dakota, employees must file a workers’ comp claim within one year after the accident date. The deadline can be extended if your firm provided medical treatment for the injury or if the employer is able to keep working.
If you are ready to explore workers’ comp insurance options for your South Dakota business, start a free online application today to compare quotes from multiple carriers.