If your Minnesota LLC has any non-owner employees, yes, it must carry workers compensation insurance, because Minnesota requires coverage once you have employees under Chapter 176. The twist for an LLC is the managers themselves: Minnesota leaves a managing member off coverage by default, but only if the LLC is small enough and the manager owns enough of it. If your LLC is bigger, or you own a smaller slice, the state treats the member as a covered employee with no opt-out.
Who this is for: Owners of a Minnesota LLC, whether a single-member LLC with no staff, a multi-member LLC, or an LLC running a payroll of W-2 employees.
The short version
- An LLC with any non-owner employee must carry workers comp; there is no headcount threshold once employees exist.
- A managing member is left off coverage by default only if the LLC has ten or fewer members, ran under 22,880 payroll hours last year, and the manager owns at least a 25 percent interest.
- That payroll figure is roughly 11 full-time employees' worth of hours, so a growing LLC can lose the manager exclusion as it hires.
- A member who is left off can elect in by giving written notice to the insurer; coverage starts the next day.
- A member who does not qualify for the exclusion is a covered employee by default, with no way to opt out.
How Minnesota treats LLC managers
Minnesota does not lump every LLC together. A managing member is left off coverage, like a sole proprietor, only when three things are all true: the LLC has ten or fewer members, it ran less than 22,880 payroll hours in the prior calendar year (about 11 full-time employees' worth), and the manager owns at least a 25 percent membership interest. Meet all three and you are off by default and can elect in if you want your own injuries paid. Miss any one of them, because the LLC grew, took on more members, or your ownership share is smaller, and Minnesota treats you as a covered employee whose pay is part of the premium, with no statutory opt-out. Either way, the moment the LLC has a non-owner employee, that employee must be covered.
What applies to your LLC
| Your LLC setup | Is comp required? | What owners and staff should know |
|---|---|---|
| Single-member, no employees, you qualify for the exclusion | Not on yourself | Left off by default; elect in with written notice to the insurer if you want coverage |
| Small LLC, managers only, all qualify | Not required for the managers | Each qualifying manager is off by default and may elect in |
| Manager who owns under 25 percent, or LLC over the size limits | Yes, that member is covered | Treated as an employee by default, with no opt-out |
| Any LLC with non-owner employees | Yes | Employees covered from day one; managers still judged by the size and ownership tests |
Electing in, or staying off
Because a qualifying Minnesota manager starts off coverage, the choice is whether to elect in. If you want your own on-the-job injuries paid by comp, you give written notice to your insurer and coverage starts the day after they receive it. If you would rather keep your pay out of the premium and rely on other coverage for yourself, you do nothing and stay off. The limited liability in an LLC shields your personal assets from many business debts, but it does not by itself answer an injured employee, which is exactly what comp is built to handle. Many owner-run LLCs keep the employees on the policy and decide manager by manager whether the owners elect in.
A Rochester example
Illustrative, not a quote. A two-member electrical contracting LLC in Rochester runs the business with one W-2 apprentice. Because the LLC has a non-owner employee, Minnesota requires a policy, and the apprentice is covered from day one. Each member owns half the small LLC, so both qualify to be left off, but because they work in the field pulling wire they each file a written election with the insurer to be covered for their own injuries. When a builder they want to work for requires proof of coverage, the LLC already has a policy and can produce a certificate the same day. We make sure the electrical work is rated correctly so the price is fair. See our workers comp for electricians page.
Real questions Minnesota owners ask
Does my Minnesota LLC have to carry workers comp?
If it has any non-owner employees, yes, from the first one. If it is only managers, whether they need coverage depends on the size of the LLC and how much each owns.
Am I covered as an LLC manager in Minnesota?
Only if you elect in. A qualifying small-LLC manager is left off coverage by default and gives written notice to the insurer to be covered. A member who does not qualify is a covered employee automatically.
When is an LLC manager left off coverage by default?
When all three are true: the LLC has ten or fewer members, it ran under 22,880 payroll hours last year, and the manager owns at least a 25 percent membership interest. Miss any one and the member is covered.
What does 22,880 payroll hours mean for my LLC?
It is the size test in the statute, roughly 11 full-time employees' worth of hours in the prior year. Below it a qualifying manager can be left off; at or above it the manager becomes a covered employee.
How do I elect coverage for myself as a member?
You give written notice to your insurer. Coverage for you starts the day after the insurer receives the notice. There is no separate state form number; it is handled through the policy.
Does having W-2 employees change things for my LLC?
Yes. Even one non-owner employee makes coverage mandatory from day one. The policy covers your employees and protects the LLC, so an injured worker generally cannot sue the business directly.
Why do clients ask my LLC for proof of coverage?
General contractors, landlords, and commercial customers require proof to manage their own risk. Even when you have covered everyone required, you usually cannot start the job without showing a certificate.
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'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?
- I only employ family: do I need workers comp?
- 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?
- What workers comp does not cover
- Minnesota electrician 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.