If you pay family members to work in your North Dakota business, they are usually covered workers and must be insured through the state fund, Workforce Safety and Insurance (WSI), from the first day. North Dakota does, though, carve out a real family exception: the spouse of the owner, and the owner's children under age 22, are not treated as employees. Beyond that spouse-and-young-children carve-out, a paid relative is generally a covered worker, and how family owners are treated depends on the business type.
Who this is for: North Dakota owners of family businesses who employ a spouse, children, parents, or other relatives, with or without outside staff.
The short version
- The owner's spouse and the owner's children under age 22 are not treated as employees.
- Other paid relatives, such as an adult child 22 or older or a sibling, are generally covered from day one.
- Family owners can be left off if they qualify as sole proprietors, partners, officers, or LLC members.
- Farm labor and household domestic service are separately exempt from the mandate.
- You buy only from the state fund, pay the full premium, and cannot deduct any of it from a worker's pay.
Family employees versus family owners
Two carve-outs can apply. The first is specific to close family: North Dakota excludes the owner's spouse and the owner's children under age 22 from the definition of an employee, so those relatives are not covered workers and their pay is not reported. The second is the owner rules: a relative who is a sole proprietor, partner, corporation officer, or LLC member is off the policy by default like any other owner. Outside those two carve-outs, a paid relative is a covered worker from the first day, whether that is an adult child of 25, a parent, or a cousin. Farm work and household domestic service sit outside the mandate on their own, no matter who does them.
How family roles are treated
| Family role | Covered? | Notes |
|---|---|---|
| Owner's spouse | No, not an employee | Excluded from the employee definition; pay is not reported |
| Owner's child under age 22 | No, not an employee | Excluded by age; a child 22 or older is a covered worker |
| Other paid relative | Yes, from day one | An adult child 22 or over, a parent, or a sibling is covered like any worker |
| Family sole proprietor, partner, or officer | Off by default | May buy optional coverage for themselves |
Getting it right in a family business
Two mistakes are common. The first is stretching the family carve-out past its edges; it covers the owner's spouse and children under 22, not adult children, not in-laws, and not other relatives, who are covered workers if you pay them. The second is assuming a relative who is really an owner has to be on the policy; a family sole proprietor, partner, officer, or LLC member is off by default and can buy optional coverage instead. When in doubt, treat a paid relative outside the carve-out as a covered worker. And because the state fund pays benefits but does not defend a lawsuit, a family business with employees usually adds stop-gap employers liability to its general liability policy.
A West Fargo example
Illustrative, not a quote. A West Fargo family runs a cleaning company as an S-corporation. The husband and wife are officers, so both are off the policy by default. Their 19-year-old daughter helps clean part-time and is not a covered worker, because she is the owners' child under 22. A 26-year-old nephew who cleans on payroll, though, is a covered worker, so he is insured through WSI from day one and the company pays the full premium. The company also adds stop-gap employers liability to its liability policy. See our workers comp for cleaning businesses page.
Real questions North Dakota owners ask
Do I need workers comp for family members in North Dakota?
Usually yes, with a real exception. The owner's spouse and the owner's children under age 22 are not treated as employees, but other paid relatives are covered workers from the first day.
Is my spouse exempt if they work in the business?
Yes. North Dakota excludes the spouse of the owner from the definition of an employee, so a spouse working in the business is not a covered worker and their pay is not reported to WSI.
What about my children who work for me?
Your children under age 22 are excluded and are not covered workers. Once a child turns 22, they are treated like any other paid employee and must be covered from that point.
What if my family members are owners, not employees?
Then the owner rules apply. A sole proprietor, partner, corporation officer, or LLC member is off the policy by default, though each can buy optional coverage for their own injuries.
Are other relatives like a parent or cousin covered?
Generally yes, if you pay them. The family carve-out is limited to the owner's spouse and children under 22, so a paid parent, sibling, cousin, or in-law is a covered worker from day one.
Where do I buy the coverage?
Only from the state fund, Workforce Safety and Insurance, known as WSI. North Dakota does not allow private workers comp carriers, so you open a WSI account and report covered workers' wages.
Does the state policy defend a family business in a lawsuit?
No. WSI pays a hurt worker's benefits but does not provide a legal defense. Family businesses with employees usually add stop-gap employers liability to their general liability policy for that.
Why North Dakota owners choose Morrow
- We shop the right market for you. In North Dakota, workers compensation is sold only through the state fund at Workforce Safety and Insurance (WSI), with no private carriers to shop, so we help you open and run your WSI account correctly and place the stop-gap employers liability and other business coverages the state fund does not include.
- 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 North Dakota guides
Every North Dakota 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 North Dakota (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)
- Hiring your first employee: what changes
- Do sole proprietors need workers comp?
- North Dakota cleaning workers comp
This guide is general information, not legal advice. North Dakota rules and penalty amounts can change, so verify current requirements with North Dakota Workforce Safety and Insurance (WSI) or a licensed advisor before you rely on them. Last updated: July 2026.