Are undocumented workers eligible for workers’ compensation benefits?

Are undocumented workers eligible for workers’ compensation benefits? It varies from state to state.

Undocumented worker rules in Minnesota

In Minnesota, undocumented workers are covered by workers’ compensation policies. According to Minnesota Statute, “aliens” are considered employees and are therefore eligible to receive benefits for work-related injuries.

This was first declared by a Minnesota Workers’ Compensation Court of Appeals case in 1999, the Gonzalez v. Midwest Staffing Case , which decided that undocumented workers are entitled to wage-loss benefits, even if they used false paperwork to get hired.

The specifics of undocumented workers’ eligibility for benefits have since then been more clearly defined. In the case of Rivas v. Car Wash Partners , an undocumented worker was injured and lost time from work. The employer offered a post-injury job, but only if the worker could provide proof that he was authorized to work in the U.S. Since the worker couldn’t offer legal documentation, he wasn’t able to return to work at the company, so the employer was able to stop paying wage-loss benefits.

Significant impact on your premium

Cases like this can have a significant impact on your workers’ compensation premium. Injured employees are entitled to receive benefits until maximum medical improvement or 130 weeks of benefits have been reached. Hiring smart can help prevent this from happening to you.

Rules in other states

Undocumented workers’ eligibility for workers’ compensation coverage can vary from state to state. If you’re not sure of your state’s laws, check with your insurance carrier.

 

This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

SFM Foundation scholarship applications accepted until March 31

The SFM Foundation will be accepting scholarship applications for the 2025-26 academic year until March 31, 2025.

The nonprofit makes college more affordable for families affected by workplace injuries by offering post-secondary education scholarships to children of parents fatally or seriously injured on the job while working for a Minnesota or Iowa employer.

Interested applicants can find a registration form and eligibility requirements for the scholarships on the SFM Foundation website .

Scholarships will be awarded based on injury severity and impact on the student and their family, among other factors.

About the SFM Foundation

The SFM Foundation was created in 2008 by SFM Companies, a regional workers’ compensation insurance group headquartered in Bloomington, Minn. The nonprofit is dedicated to easing the burdens on families affected by workplace accidents. Since its inception, the foundation has awarded 247 scholarships totaling $4.1 million. For more information, visit sfmfoundation.com .

The SFM Foundation is an affiliate of Kids’ Chance of America in Iowa and Minnesota.

 

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How does a workers’ compensation claim affect my premium?

One factor that determines your workers’ compensation premium is your loss history. This means that having a workers’ compensation claim can cause future premiums to increase.

Impact for larger organizations

At a larger organization, past claim costs are used to determine your experience modification factor (e-mod), a multiplier used to calculate your premium. If your claim costs are lower than average when compared with other organizations of similar type and size, then your e-mod will be lower than 1. That means it will reduce your workers’ compensation premium. On the other hand, if your claim costs are higher than average, your e-mod will be over 1. That will increase your premium.

The e-mod takes into account three years of loss history not including the most recent policy year, so that’s how long any given claim may affect your premium.

Impact for smaller organizations

If your premium is low enough (generally below $3,000 to $7,000 depending on the state), you may not be assigned an experience modification factor (e-mod). If you don’t have an e-mod, the workers’ comp underwriter will look at your loss history and use that information to decide whether your business is a risk he or she is comfortable writing. In some cases, an underwriter might be able to increase or decrease your premium based on loss history. This depends on state law and the insurance company’s underwriting standards.

Minimize the impact of claims by bringing employees back to work

One key thing you can do to minimize the impact of claims on your premium is bring employees back to work as soon as they are medically able. You could modify the employee’s job, offer reduced hours or offer a light-duty job until the employee is fully healed. For example, if you have a painter with an arm injury, he or she could answer phones or prepare estimates.

To save the most on future premiums, bring injured employees back to work before your state’s waiting period has kicked in if possible. (This is three to seven days depending on your state.) If you do this, the claim will be considered medical-only, so only 30 percent of the claim costs will be included in the e-mod calculation.

In addition to the cost savings, bringing employees back to work as soon as possible helps employees maintain their mental and emotional well-being, and improve their financial stability. It’s not only the smart thing to do, but also the right thing to do.

 

This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

Video highlights danger of falls in parking lots

Cold, snowy and icy weather are coming soon. As the weather brings colder and more slippery conditions, it’s a good time to remind your employees to walk carefully when outdoors.

Our new video for employees aims to catch their attention and remind them of the dangers they face when walking through parking lots in winter weather.

Parking lot slips and falls are a common source of work-related injuries during the winter months, and exercising caution can help your employees avoid nasty accidents.

We offer many resources on our winter slips and falls page you can use to prevent these types of injuries among your employees.

Other considerations for parking lot slips and falls

Every state’s law is different, but typically employers are required to provide safe routes for employees from their vehicles into work.

This means if an employee is injured by tripping and falling in the designated parking lot on the way into or out from work, it could be considered a work injury, making the employee eligible for workers’ compensation medical and wage loss benefits.

It’s not uncommon, and the injuries are often serious.

Injuries aren’t just bad for your employees. Having a lot of claims can negatively affect your costs as an employer, too.

Keep parking lots maintained

It’s very important to make sure that parking lots are well-maintained — cleared of snow and ice in the winter and free of cracks and other trip hazards.

Make employees aware of hazards

Your employees can also play a role in avoiding slip-and-fall injuries by walking carefully and wearing appropriate footwear. See SFM’s winter slip-and-fall prevention page for posters, table tents and other resources you can use to keep fall prevention top of mind for employees.

 

Originally posted October 2027; updated January 2025.

Workers’ compensation exemptions for Minnesota small business owners and family members

Generally speaking, Minnesota law requires employers to provide workers’ compensation coverage for all employees.

But the law does allow employers to exclude certain types of employees from coverage, such as small business owners and their close relatives.

Following are the types of employees that are exempt from mandatory insurance coverage by Minnesota state law :

  • Sole proprietorships and partnerships:
    Someone operating a business as a sole proprietor isn’t required to get workers’ compensation insurance for his or her spouse, parents or children working in the business, regardless of age or wage rate. However, the business owner would have to provide coverage for any other employees. Similarly, members of a partnership — such as a law firm — don’t have to purchase coverage for themselves. If their spouses, parents or children are employed by the partnership, they’re not required to provide coverage for them either.
  • Executive officers of a closely held corporation:
    A closely held corporation is one in which the capital stock is held by no more than 10 people and has had less than 22,880 hours of payroll in the preceding calendar year (January 1 to December 31). Executive officers of closely held corporations can be excluded from coverage if they are elected or appointed in accordance with the company’s charter or bylaws and they own at least 25 percent of the capital stock of the corporation (exclusive of any stock owned by other family members). If executive officers qualify to be excluded from workers’ compensation coverage, their spouses, parents and children are also excluded if they work in the same business. Relatives within the third degree of kinship — such as uncles, nieces, siblings and grandchildren — can also be excluded, but to do so, the employer must file a written election with the Minnesota Department of Labor and Industry.
  • Managers of limited liability corporations:
    A limited liability company (LLC) has some attributes of a corporation and others of a partnership. If an LLC has 10 or fewer members and has less than 22,880 hours of payroll in the preceding calendar year (January 1 to December 31) managers who own at least a 25 percent membership interest aren’t required to purchase workers’ compensation coverage for themselves. If managers qualify to be excluded from workers’ compensation coverage, their spouses, parents and children are also excluded if they work in the same business. As with executive officers, relatives of a manager within the third degree of kinship can also be excluded, but to do so, the employer must file a written election with the Minnesota Department of Labor and Industry.

Even if state law doesn’t require workers’ compensation coverage for certain individuals, a business can choose to cover them by notifying its workers’ compensation insurer in writing.

If you find that you do need workers’ compensation insurance, you can get a quote through our website.

What about other states?

The rules on which family members can be excluded from workers’ compensation coverage, if any, differ based on state laws. Here are the rules in SFM’s core states:

Indiana

Exceptions in Indiana workers’ compensation law:

  • Sole proprietors, limited liability company managers, and partners aren’t covered unless they elect to be
  • Agricultural employees performing traditional types of farm labor directly related to the tending of crops and livestock are not included in the work comp statute. Workers doing other types of work in a farm setting may be covered by work comp law. Employers can purchase a work comp policy for the farm workers

Iowa

Exceptions in Iowa workers’ compensation law:

  • Sole proprietors
  • Independent contractors, limited liability company members and partners aren’t covered unless they elect to be
  • For family farms, sole proprietors, partners, officers, members of an LLC and their spouses, parents, brothers, sisters, children and step-children are excluded

Kansas

There is an exception in Kansas workers’ compensation law: Agricultural pursuits and employments are excluded from the Work Comp Act, unless the employer is the state of Kansas.

Nebraska

There are a few exceptions in Nebraska workers’ compensation law, including:

  • Household domestic servants in a private residence
  • Some agricultural operations such as those employing only relatives or those employing fewer than 10 full-time employees for fewer than 13 calendar weeks (consecutive or not)
  • Self-employed individuals, sole proprietors, partners and limited liability company members who don’t elect to be covered

South Dakota

There are a few exceptions in South Dakota workers’ compensation law:

  • Domestic servants working less than 20 hours per week or for less than six weeks in any 13-week period
  • Farm or agricultural labor
  • One whose employment is not in the usual course of trade, business, occupation or profession of the employer (such as independent contractors)

Tennessee

According to the Tennessee Department of Labor & Workforce Development , there are a few exceptions in Tennessee workers’ compensation law:

  • State and local governments and those employing farm laborers or domestic help
  • Sole proprietors, partners and members limited liability companies (LLCs) aren’t included in the count of employees
  • Corporate officers can exempt themselves but are not excluded from the count of employees unless they are not compensated
  • Family members, if the applicant and members of the same family hold at least 95% ownership of the business

Wisconsin

There are a few exclusions in Wisconsin , including:

  • Domestic servants, such as nannies
  • Sole proprietors, partners, and members of limited liability companies (unless the organization elects to cover these individuals)
  • Volunteers of nonprofit organizations whose salary or in-kind compensation doesn’t top $10 per week
  • Employees of Native American tribal enterprises, unless the tribe elects to waive its sovereign immunity

Small business owners and work comp coverage

Required or not, some owners choose to buy workers’ compensation insurance for themselves so that in the event of a work injury, their medical expenses and lost wages would be paid. Others opt out and secure coverage for work-related incidents through their health, disability and life insurers. (Note that many health and disability insurance policies specifically exclude work-related injuries from coverage, so it’s important to check and make sure you’d be covered.)

Learn more about workers’ compensation coverage

Determining whether your employees fit into these categories can be complicated. It’s best to contact your agent, insurer, employment law attorney, or state’s labor department to find out whether you’re required to provide workers’ compensation insurance.

 

Originally published April 2019; updated January 2025. This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

Letter from the President: Another strong year for SFM

Terry Miller
SFM CEO Terry Miller

Even under growing pressure from package carriers, SFM had another successful year in 2024.

The achievements at SFM are a direct result of our relationships with our agent partners — through both policyholder retention and generating new business.

We continue to strive to be the leader in workers’ compensation coverage, providing unmatched service and working to keep employees safe while ensuring clients see reductions in their experience modification factor.

Our commitment to service excellence is the foundation for the success we share, and I believe the results will bear that out every time.

Highlights from 2024 include:

  • SFM’s policyholder retention level of 96% further demonstrates our industry-leading customer loyalty
  • Growth in our newer markets continues, particularly Indiana and Tennessee
  • Policyholder surplus growth larger than premium growth
  • We continue to make enhancements to our online portals, the SFM Agency Manager (SAM) and MyPayroll, making our processes smoother and more user friendly
  • We upgraded the SFM Resource Catalog, released new promotional videos and again provided our policyholders with valuable safety webinars

As we move forward in the new year, we want to build on the strength of our partnerships, write more business with our agent partners and keep the momentum we have built over the years. When you choose to keep your accounts with SFM, we recognize that you are resisting the pressure from the multi-line carriers demanding the consolidation of the work comp with their collateral lines.

SFM realizes that strong financial results are important, but we know our unwavering commitment to customer service and doing right by all our stakeholders is paramount.

Thank you for your continued support and partnership! We look forward to sharing success with you and your clients for many years to come.

 

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2024 results: Customer focus drives success

SFM continues to see growth beyond its home state of Minnesota, where it remains first in terms of workers’ compensation market share.

“Our relationships with agency partners outside of Minnesota are gaining more momentum with each passing year,” said Mike Happe, Senior Vice President and Chief Marketing Officer. “SFM’s reputation as the work comp experts has helped us develop and retain business in our newer markets.”

Below are SFM’s top five states and their carrier rank based on written premium (the rankings for 2024 will be released in the spring of 2025).

  • Minnesota – 1
  • Wisconsin – 15
  • Iowa – 7
  • Nebraska – 9
  • South Dakota – 4

Meanwhile, SFM’s growth in newer markets saw significant increases in Kansas, Indiana and Tennessee, and the company is putting additional resources into those states. Also of note, Cody Allen, SFM Territory Manager, has been elected to the governing board at the Indiana Compensation Rating Bureau.

Highlights from 2024 include:

  • 96% policyholder retention rate
  • Added 6,800 new policyholders, resulting in new business premium of over $26 million
  • Total written premium for the year: $255 million (excluding the Wisconsin Assigned Risk Plan)
  • Another year of an A- rating from AM Best
  • SFM Foundation up to $4.1 million in total scholarships awarded

“Despite seeing increasing claim severity, we have seen measured, steady growth, and SFM will continue that strategy in the years to come,” said Steve Sandilla, Senior VP and Chief Business Officer. “We continue to make the best outcomes for clients our primary focus and we are thankful for the trust of our agents and policyholders year after year.”

Other SFM items of note

SFM partnered with more than 3,000 independent agents in 2024 and closed out the year with its number of businesses served over 50,000. That adds up to more than 500,000 covered employees.

The company also retained the service contract for the Minnesota Workers’ Compensation Assigned Risk Plan (ARP), which renewed for another five years, and SFM’s portion of the Wisconsin program is increasing next year from 20% to 25%. Company leaders are working on growing that business in other core states for the future.

The Minnesota ARP, served by SFM’s Superior Point, handled 13,500 policyholders and $20 million in premium for 2024. In Wisconsin, SFM handled about 4,000 policyholders and $12.5 million in premium for 2024.

Also, SFM Risk Solutions provided third-party administration service to 32 self-insured clients in 2024, including four groups with about 2,000 individual members.

Lastly, SFM added Dr. Andrew Wilkins to its staff as Chief Medical Director on the Medical Services team in 2024.

 

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SFM CEO Miller named AASCIF President

Terry Miller
SFM CEO Terry Miller

SFM CEO Terry Miller has been named the next president of the American Association of State Compensation Insurance Funds (AASCIF).

“When it comes to sharing new and old ideas on how to be a better workers’ compensation insurance carrier, I have not come across an organization close to as good as AASCIF,” Miller said.

He begins his two-year term as president starting in January 2025. AASCIF is an association of workers’ compensation insurance companies from 26 different states, plus eight work comp boards in Canada.

Miller has long been involved with AASCIF, attending his first meeting with the group in Montana in 1985. He has served the organization in a number of roles over the years, including:

  • Being a member of the group’s Audit and Data committee in the 1980s
  • Joining the Finance and Investment Committee in the 1990s, chairing that group in 2002
  • Previously serving as the AASCIF treasurer
  • Being an active member of the Executive Committee

“Terry exemplifies AASCIF’s values of service and sharing. I first met Terry at the AASCIF annual conference in Oklahoma City back in 2017. I chatted with him and learned that he was preparing to host the 2018 conference in Minneapolis. He shared his belief that AASCIF is the best organization going when it comes to sharing professional experiences and is an important part of the overall apprenticeship type model that many of its members utilize,” said Vern Steiner , President & CEO of the State Compensation Insurance Fund. “Through my term as president, Terry’s contributions have driven home his commitment to AASCIF, and I am confident that I could not be handing the presidency over to anyone who cares more about our organization.”

 

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Remind policyholders: winter safety must continue

It’s that time of year again…

With winter in full swing — and the upcoming thawing and refreezing cycles in the months ahead — workplace safety should be paramount.

Be sure to remind your policyholders that just because spring is on the horizon, it doesn’t mean they can be any less vigilant about workplace safety.

Slips, trips and falls – the bottom line

Slips, trips and falls are a leading cause of workplace injury. They can be severe, leading to fractures, head trauma or worse.

The costs of covering these claims gets expensive. Not only can it negatively influence the employer’s experience modification factor, but it also impacts agency and carrier results. SFM estimates the average winter slip-and-fall lost-time claim to be between $50,000 and $55,000.

Weather is a major factor in workers’ compensation. Slipping and falling because of snow and ice is one of the most common workplace injuries.

Resources for policyholders

With a few reminders and some common sense, policyholders can help employees stay safe and reduce the potential for claims.

A few basic tips for you to pass along include:

  • Properly maintain your parking lot and walking areas
  • Encourage employees to wear appropriate shoes for the weather
  • In the case of a snowstorm, let employees work from home or reschedule if possible
  • Manage snow piles near walkways to avoid melting snow refreezing to ice

Policyholders should educate their employees about other winter safety measures, such as walking like a penguin, salting slippery areas, avoiding shortcuts, and stepping down, not out, of vehicles.

If you are looking for additional resources to help in these efforts, check out what’s available on our website or contact your underwriter.

 

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SFM attending industry events in 2025

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