If you're running a business in North Dakota, workers' compensation isn't optional—it's the law. And unlike most other states, you can't shop around for the best rate or pick your favorite insurance carrier. North Dakota operates what's called a monopolistic workers' comp system, which means there's exactly one place to get your coverage: Workforce Safety & Insurance (WSI), the state-run fund. Here's everything you need to know about North Dakota's workers' comp requirements, from who needs coverage to what happens if you skip it (spoiler: don't).
Who Needs Workers' Compensation Coverage in North Dakota?
The short answer: almost every employer. North Dakota law requires all employers to insure all employees—full-time, part-time, seasonal, and occasional workers—before they begin working. That's right: no minimum employee threshold. If you hire one person, even for a few hours a week, you need workers' comp coverage in place before their first shift.
This is stricter than many other states, where small businesses might get a pass if they have fewer than three or five employees. North Dakota doesn't play that game. Whether you're hiring a single barista for your coffee shop or building a construction crew of 50, you're required to have coverage through WSI from day one.
Who's Exempt from Workers' Comp in North Dakota?
While North Dakota's law casts a wide net, there are some notable exemptions. Here's who doesn't have to be covered:
Business owners, partners, corporate officers, and LLC members are not required to carry coverage for themselves. However, you can elect to cover yourself if you want the protection—and many business owners do, especially in higher-risk industries. Your kids under 22 working for the family business? They're exempt too. Once they turn 22, though, coverage becomes mandatory.
Licensed real estate professionals who have written agreements defining them as independent contractors are also exempt. Agricultural and farm workers generally don't need coverage unless a custom operator from outside North Dakota comes in to perform custom work. Household domestic workers, employees of religious organizations, and federal or railroad employees are also off the hook.
One critical note: if you're claiming someone is an independent contractor rather than an employee, you'd better have your documentation tight. The burden of proof is on you to show they truly meet the legal definition of an independent contractor. If WSI disagrees, you could be on the hook for unpaid premiums and penalties.
Understanding North Dakota's Monopolistic System
Here's where North Dakota stands apart from most of the country. The state operates a monopolistic workers' compensation system, meaning there is no private insurance marketplace. You cannot call up your favorite insurance broker and get a competitive quote. There's only one option: Workforce Safety & Insurance (WSI), which has been the exclusive provider since 1919.
North Dakota is one of only four states with this setup (the others are Ohio, Washington, and Wyoming). The idea behind a state fund is to create a stable, employer-financed, no-fault insurance system that provides consistent coverage and keeps costs predictable. And it's worked pretty well: WSI has issued $1.8 billion in employer dividends over the past 19 out of 20 years. In fiscal year 2024 alone, employers received a 50% dividend credit worth an estimated $83 million.
There is one catch, though: WSI's workers' comp policies do not include employer's liability insurance. That's the coverage that protects you if an employee sues you over a workplace injury. In competitive states, employer's liability is usually bundled into your workers' comp policy. In North Dakota, you'll need to purchase stop-gap coverage through a private general liability insurance policy to get that protection.
What Happens If You Don't Have Coverage?
Let's be blunt: skipping workers' comp in North Dakota is a very bad idea. WSI has the authority to issue a Cease & Desist Order to any business operating without coverage. You'll be required to stop all business operations immediately until you get insured.
The penalties are steep: a $10,000 fine right off the bat, plus $100 per day for every day you remain uninsured. If that's not enough to get your attention, consider this: you'll also be required to pay all the premiums you should have been paying during the uninsured period. And if an employee gets injured while you're uninsured? You're personally liable for the actual cost and reserves of that claim. No cap, no limit—just you, your checkbook, and the medical bills.
Oh, and there's more: injured workers can sue you directly for damages during the period you were uninsured. Workers' comp is typically a no-fault system that shields you from lawsuits. Without it, that protection evaporates. Even small violations can add up—failing to post your Certificate of Premium Payment and the Fraud and Safety Hotline number can result in a $250 fine.
How to Get Workers' Comp Coverage in North Dakota
Getting coverage is straightforward: you apply through Workforce Safety & Insurance before you hire your first employee. You'll provide information about your business, payroll, and the type of work your employees will be doing. WSI will assign you a classification code based on your industry and calculate your premium based on your payroll and risk level.
Premiums are experience-rated, meaning your costs can go down if you maintain a safe workplace with few claims. Conversely, a history of injuries and claims will drive your rates up. The good news is that because WSI is employer-financed and returns profits to policyholders, you're likely to see dividend credits in years when the fund performs well—which has been most years recently.
Once you're set up, make sure to keep your coverage current, report payroll accurately, and post your Certificate of Premium Payment in a visible location at your workplace. Staying compliant is easy when you're organized, and the penalties for slipping up just aren't worth it.
North Dakota's workers' comp system is unique, but it's not complicated. Get your coverage through WSI before you hire your first employee, keep your premiums current, and maintain a safe workplace. Do that, and you'll not only stay compliant—you might even get a dividend check at the end of the year.
