If the only people working for your Minnesota business are family, whether you need workers compensation depends on how the business is set up. If you are a sole proprietor or a partner, your spouse, parent, and child are left off coverage by default, so a business run entirely by that close family may need no policy. But a corporation or an LLC changes the answer, and hiring family outside that circle, or any non-family worker, can trigger the requirement.
Who this is for: Minnesota owners who employ only relatives, such as family farms, family-run shops, and husband-and-wife contracting businesses.
The short version
- A sole proprietor's or partner's spouse, parent, and child are left off coverage by default.
- Those family members can be electively covered if you want their work injuries paid.
- In a corporation or LLC, close relatives of a qualifying officer or manager can be left off only by a written election; other family workers are covered employees.
- A family farm is exempt while it stays under the wage ceiling for hired farm laborers.
- Hire any worker outside the covered family circle and coverage becomes mandatory for that worker.
How the answer changes with your setup
Minnesota's family treatment is tied to your business type. For a sole proprietor or a business partner, the statute leaves the owner's spouse, parent, and child off coverage by default, the same as the owner. For a corporation or LLC, only relatives within a close degree of kinship to an officer or manager who already qualifies for the owner exclusion can be left off, and only if the company files a written election to exclude them; a cousin or in-law on the payroll of an ordinary corporation is just a covered employee. And a family farm has its own rule: family members of the farmer are exempt, and hired farm laborers are exempt only while the farm stays under the statutory wage ceiling.
| Who is working | Business type | Covered? |
|---|---|---|
| Spouse, parent, or child | Sole proprietor or partnership | Left off by default; may elect in |
| Close relative of a qualifying officer or manager | Small corporation or LLC | Can be excluded only by a written election |
| Any family member | Corporation or LLC that does not qualify | Covered employee from day one |
| Family member of the farmer | Family farm | Exempt under the family-farm rule |
| Non-family employee | Any | Covered from day one |
Family farms have their own line
Minnesota exempts work done for a family farm, but the exemption has a limit. A farm counts as a family farm only while the cash wages it pays to hired farm laborers stay under the statutory ceiling, with an alternative track for operations that carry a set amount of liability and medical coverage. So a farmer who pays hired laborers above that ceiling in a year generally must carry workers comp for those non-family farm workers. Family members of the farmer and neighboring farmers trading work stay exempt, but the paid crew crosses over once the wages add up.
Why family businesses still consider a policy
Even when the law leaves your family off, two things push family businesses toward a policy. First, a serious injury to a working spouse or child is not paid by comp unless you elected them in, and a health plan may not cover a work injury, so electing in can protect the family income. Second, general contractors and clients often require proof of coverage before you can start a job, so a family business that wants those contracts usually needs a policy regardless of who is on the crew.
A Minnesota landscaping example
Illustrative, not a quote. A husband-and-wife landscaping business near Mankato operates as a sole proprietorship, with the spouse and an adult child doing the work. Because they are the sole proprietor's spouse and child, Minnesota leaves all three off coverage by default, so no policy is legally required. When they take on a commercial client that demands proof of coverage, they elect the family in and buy a small policy, which produces the certificate and also pays if one of them is hurt on a job. If they later hire a non-family crew member, that worker must be covered from day one. See our workers comp for landscapers page.
Real questions Minnesota owners ask
Do I need workers comp if I only employ family in Minnesota?
It depends on your business type. A sole proprietor's or partner's spouse, parent, and child are left off by default, so a business run by that close family may need no policy. A corporation or LLC changes the answer.
Are my spouse and children covered if I am a sole proprietor?
By default they are left off coverage, like you. You can elect them in with written notice to the insurer if you want their on-the-job injuries paid, and coverage starts the next day.
What about family working for my corporation or LLC?
Only close relatives of an officer or manager who already qualifies for the owner exclusion can be left off, and only by a written election. Other family members are covered employees from day one.
Is a family farm exempt from workers comp?
Family members of the farmer are exempt, and hired farm laborers are exempt only while the farm stays under the statutory wage ceiling for cash wages paid to those laborers in a year.
When does hiring farm labor trigger coverage?
When the cash wages you pay hired farm laborers rise above the family-farm ceiling for the year. At that point you generally must carry workers comp for those non-family farm workers.
Should I cover my family even if I do not have to?
Often worth it. Comp pays a working relative's medical bills and part of lost wages for a work injury, which a health plan may not, and it produces the proof of coverage many clients require.
What happens when I hire someone outside the family?
Coverage becomes mandatory for that worker right away. Minnesota has no waiting period, so a non-family employee must be covered from the first day they work.
Why Minnesota owners choose Morrow
- We shop the right market for you. In Minnesota you buy workers' comp on the open, competitive market from any private insurer licensed in the state, because there is no state fund, and if no carrier will take you the assigned-risk plan (MWCARP) is the guaranteed backstop, so we can shop your rate freely and still have a fallback for hard-to-place work.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Minnesota guides
Every Minnesota business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Minnesota (start here)
- Workers comp: the owner's overview
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Do sole proprietors need workers comp?
- Hiring your first employee: what changes
- Minnesota landscaper workers comp
This guide is general information, not legal advice. Minnesota rules and penalty amounts can change, so verify current requirements with the Minnesota Department of Labor and Industry or a licensed advisor before you rely on them. Last updated: July 2026.