If your Minnesota nonprofit pays any worker more than 1,000 dollars in a year, yes, it must carry workers compensation insurance for that person. Minnesota has no blanket charity exemption; it only carves out a person paid 1,000 dollars or less in a year by a nonprofit association. Being a 501(c)(3) or tax-exempt organization changes your taxes, not your duty to cover the people you pay above that small threshold.
Who this is for: Minnesota nonprofits and charities, from a small community group with one paid coordinator to an established organization with a full staff and a board of directors.
The short version
- A nonprofit that pays a worker more than 1,000 dollars in a year must carry workers comp for that worker.
- The only nonprofit-specific carve-out is a person paid 1,000 dollars or less in a year by a nonprofit association.
- A genuine unpaid volunteer who receives no pay is generally not an employee.
- Paid officers or directors follow the corporation rules, so most are covered unless the corporation is small and they own the qualifying share, which rarely fits a nonprofit.
- Grants and facility-use agreements often require proof of coverage before you can operate.
Paid staff, officers, and volunteers
The line that matters for a Minnesota nonprofit is pay. Anyone the organization pays more than 1,000 dollars in a year is an employee who must be covered, whether the job is full time, part time, or seasonal. A person paid 1,000 dollars or less in a year by a nonprofit association is the one carve-out and does not trigger coverage. A genuine volunteer who receives no wages is generally not an employee, so pure volunteers usually do not trigger the mandate; but the moment a volunteer is paid a regular wage or stipend above the small threshold, treat them as an employee and confirm coverage.
| Person | Employee for comp? | Notes |
|---|---|---|
| Paid staff member over 1,000 dollars a year | Yes | Covered from the point pay passes the threshold |
| Worker paid 1,000 dollars or less in a year | No | The nonprofit-association carve-out applies |
| Genuine unpaid volunteer | Generally no | No wages usually means no employee status; confirm if a stipend is involved |
| Paid officer or director | Usually yes | Follows the corporation officer rules; most are covered employees |
Why the exemption you are thinking of does not exist
Owners of small nonprofits often assume charities get a blanket pass. In Minnesota they do not. The only nonprofit carve-out is the 1,000-dollar-a-year worker, so a paid youth-program coordinator or a paid part-time bookkeeper earning more than that is an employee who must be covered. The risk is real: a paid staffer who is hurt setting up an event, and an uninsured nonprofit, is exactly the situation the state's Special Compensation Fund reimbursement and the 65 percent penalty are built for.
Grants, leases, and proof of coverage
Beyond the state mandate, workers comp is often a condition of doing your work. Government grants, foundation funding, and facility-use or lease agreements commonly require the nonprofit to carry coverage and to show proof of it before funds flow or doors open. A nonprofit that has covered its paid staff can produce that proof quickly, which keeps grant timelines and program launches on track.
A Minneapolis example
Illustrative, not a quote. A Minneapolis community nonprofit runs mostly on volunteers but pays one full-time program director and one part-time weekend coordinator, both earning well over 1,000 dollars a year. Because it pays those staff above the threshold, Minnesota requires a policy, and both are covered, while the unpaid volunteers are generally not employees. The board members serve without pay and are not on the policy. When a state grant requires proof of coverage before releasing funds, the nonprofit already has a policy and sends the certificate the same day. See our workers comp for nonprofits page.
Real questions Minnesota owners ask
Does our Minnesota nonprofit need workers comp?
If it pays any worker more than 1,000 dollars in a year, yes, for that worker. Minnesota only exempts a person paid 1,000 dollars or less in a year by a nonprofit association.
Are we exempt because we are a 501(c)(3)?
No. Being tax-exempt changes your taxes, not your duty to cover paid workers. Minnesota has no blanket nonprofit exemption, only the narrow 1,000-dollar-a-year carve-out.
Do unpaid volunteers count toward the requirement?
Generally no. A genuine volunteer who receives no wages is usually not an employee. But if a volunteer is paid a regular wage or stipend above the small threshold, treat them as an employee and confirm coverage.
What is the 1,000 dollar rule for nonprofits?
Minnesota exempts a person paid 1,000 dollars or less in a year by a nonprofit association. Once you pay someone more than that in a year, they are an employee who must be covered.
Are our board members or officers covered?
Paid officers or directors follow the corporation officer rules, so most are covered employees. Unpaid board members who receive no wages are generally not employees.
Do grants or leases require workers comp?
Often. Government grants, foundation funders, and facility or lease agreements commonly require the nonprofit to carry coverage and show proof of it before funds are released or space is used.
What if our nonprofit does not carry it?
Minnesota can fine the nonprofit per employee for each week uninsured, pay an injured worker through the state's Special Compensation Fund and bill it plus a 65 percent penalty, and an injured paid worker can sue it directly.
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?
- 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)
- Hiring your first employee: what changes
- What workers comp does not cover
- Minnesota nonprofit 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.