Minnesota Workers' Compensation | Payroll Guide

Minnesota Payroll And Workers' Compensation Rules

Minnesota payroll professionals play an important role in workers' compensation administration because payroll records provide important wage, hours, employment, classification, and payment information used to administer workers' compensation claims, calculate wage-loss benefits, support insurance reporting and audits, and document an employer's compliance responsibilities.

Understanding Minnesota workers' compensation rules is especially important for payroll professionals who maintain employee records, calculate wages, process payroll after workplace injuries, respond to workers' compensation claims, or provide payroll information to an employer's insurance carrier, third-party administrator, self-insurance program, or the Minnesota Department of Labor and Industry.

Minnesota Workers' Compensation Compliance Overview

At A Glance

Minnesota generally requires employers to provide workers' compensation coverage for employees unless a specific statutory exception applies.

Employers generally must purchase workers' compensation insurance or obtain approval to self-insure.

Minnesota does not generally have a minimum number of employees that must be employed before workers' compensation coverage is required. Even an employer with one part-time employee generally must provide coverage.

Employees generally include part-time workers and other workers performing services for hire, subject to statutory exceptions.

Employees should report workplace injuries to their employer as soon as possible.

Employers are responsible for completing the First Report of Injury (FROI) form when a work-related injury is reported.

For a lost-time claim, the employer generally must submit the FROI to its workers' compensation insurer within 10 days of the first day of disability or the date the employer became aware of the disability, whichever is later.

Insurance companies and self-insured employers generally have 14 days to electronically file the FROI with the Minnesota Department of Labor and Industry when the claim is subject to state reporting requirements.

Workplace fatalities and serious injuries generally must be reported to the Minnesota Department of Labor and Industry within 48 hours.

Minnesota generally has a three-calendar-day waiting period before wage-loss benefits begin, subject to statutory rules concerning retroactive payment.

If disability continues for 10 calendar days or longer, compensation generally may be payable from the first day of disability.

Minnesota workers' compensation benefits can include wage-loss benefits, medical benefits, vocational rehabilitation benefits, permanent partial disability benefits, permanent total disability benefits, and dependency benefits.

For injuries on or after October 1, 2025, Minnesota's statewide average weekly wage is $1,423, with a maximum weekly benefit of $1,536.84 and a minimum weekly benefit of $307.37 under the applicable rate schedule.

Minnesota workers' compensation benefit levels are adjusted periodically, so payroll and claims personnel should verify the applicable rate based on the date of injury.

Minnesota Workers' Compensation Employer Requirements

Minnesota generally requires employers to provide workers' compensation coverage for employees. Employers generally satisfy this requirement by purchasing workers' compensation insurance or obtaining approval to self-insure. Minnesota does not generally use a minimum employee-count threshold for mandatory coverage.

Minnesota Workers' Compensation Insurance

Minnesota employers generally purchase workers' compensation insurance through an insurance agent or insurance company. An employer that qualifies may seek approval to become self-insured after satisfying applicable financial and regulatory requirements.

Payroll departments should maintain current workers' compensation insurance information, including the carrier, policy information, applicable payroll classifications, and claims administrator contact information. Payroll should also coordinate with HR and management whenever employee classifications, work locations, job duties, or payroll arrangements change.

Minnesota Workers' Compensation Coverage For Employees

Minnesota generally requires coverage for employees performing services for hire, including part-time employees and minors, subject to statutory exceptions. Employers should carefully review whether a worker qualifies for an exemption before excluding the worker from coverage.

Minnesota Workers' Compensation Coverage For Independent Contractors

Workers' compensation status depends on the actual employment relationship and applicable Minnesota law. Employers should not rely solely on a contract, job title, or Form 1099 when determining whether an individual is an employee or independent contractor for workers' compensation purposes.

Minnesota Workers' Compensation Coverage For Multistate Employers

Employers operating in multiple states should review Minnesota workers' compensation requirements whenever employees perform services in Minnesota. The applicable requirements can depend on the employee's work location, employment relationship, nature of the work, and other circumstances.

Payroll departments should maintain accurate records showing where employees perform services. Particular attention should be given to employees who regularly travel between states, relocate, work remotely, or perform services in multiple jurisdictions.

Minnesota Workers' Compensation Coverage Requirements

Is Workers' Compensation Insurance Required In Minnesota?: Generally, yes. Minnesota generally requires employers to provide workers' compensation coverage unless a statutory exception applies.

How Many Employees Must A Business Have Before Workers' Compensation Is Required?: Minnesota generally has no minimum employee threshold. An employer with only one part-time employee generally must provide coverage.

Are Part-Time Employees Covered?: Generally, yes. Part-time employees are generally covered unless a specific statutory exception applies.

Are Seasonal Employees Covered?: Coverage depends on the employment relationship and any applicable statutory exception. Seasonal status alone should not be assumed to eliminate coverage.

Are Corporate Officers Covered?: Coverage can depend on ownership, duties, and applicable statutory provisions. Employers should review Minnesota requirements before excluding an officer.

Are LLC Members And Managers Covered?: Coverage depends on the individual's status and applicable statutory provisions. Employers should review Minnesota ownership and management rules before excluding an individual.

Are Sole Proprietors Required To Have Workers' Compensation Insurance?: A sole proprietor's own status differs from the status of employees. A business with employees generally must provide required coverage unless an exception applies.

Are Independent Contractors Covered?: Workers' compensation status depends on the actual relationship and applicable Minnesota requirements. A contract, Form 1099, or job title does not by itself determine coverage.

Can A Minnesota Employer Self-Insure?: Yes. Employers may seek approval to self-insure if they satisfy applicable financial and regulatory requirements.

What Happens If An Employer Fails To Carry Required Coverage?: Employers that fail to properly insure employees can face enforcement action and penalties under Minnesota law.

Minnesota Workers' Compensation Injury Reporting

Employee Notice Of Injury: Employees should report workplace injuries to their employer as soon as possible. Minnesota law establishes deadlines for reporting injuries, and failure to report within applicable timeframes can affect a claim.

Employer First Report: Minnesota uses the First Report of Injury (FROI) form to begin the workers' compensation claim process.

Employer Reporting To Insurer: For a lost-time claim, the employer generally has 10 days from the first day of disability or the date the employer became aware of the disability, whichever is later, to submit the FROI to its workers' compensation insurer.

Insurer Reporting To Minnesota DLI: The insurer generally must electronically file the FROI with the Minnesota Department of Labor and Industry within 14 days of the first day of disability or the date the employer became aware of the disability, whichever is later, when state reporting is required.

Self-Insured Employer Reporting: A self-insured employer generally must electronically file the FROI with the Department within the applicable 14-day period when state reporting is required.

Serious Injury Reporting: Workplace fatalities and serious injuries generally must be reported to the Minnesota Department of Labor and Industry within 48 hours.

Employee Copy: The employer or insurer must provide the injured employee with a copy of the FROI and the Minnesota workers' compensation system employee information sheet.

Payroll Information: Payroll should promptly provide accurate wage, hours, employment, and compensation information requested by the insurer or claims administrator.

Minnesota Workers' Compensation Wage Information

Payroll records can be particularly important when a Minnesota workers' compensation claim involves wage-loss benefits. Payroll may be required to provide wage and employment information used to determine an employee's applicable average weekly wage and compensation rate.

Employer Wage Information

Payroll should maintain complete wage and hours-worked records for the period relevant to the claim. Special circumstances, such as irregular schedules, multiple pay rates, overtime, bonuses, commissions, or other compensation, may require additional information when determining the employee's applicable wage information.

Maintain complete historical wage records

Maintain hours-worked records

Track regular wages

Track overtime wages

Track bonuses and commissions

Track other compensation relevant to wage calculations

Document wage changes before the injury

Provide accurate wage information to the carrier or claims administrator

Review wage information for accuracy before submission

Minnesota Workers' Compensation Benefit Calculations

Average Weekly Wage: Minnesota workers' compensation wage-loss benefits generally depend in part on the employee's applicable average weekly wage.

Temporary Total Disability: Temporary total disability benefits may apply when a compensable injury prevents an employee from working.

Temporary Partial Disability: Temporary partial disability benefits may apply when an employee returns to work but earns less because of the work injury.

Waiting Period: Minnesota generally has a three-calendar-day waiting period for wage-loss benefits.

Retroactive Waiting Period: If disability continues for 10 calendar days or longer, compensation generally may be payable from the first day of disability.

Permanent Partial Disability: An injured employee may qualify for permanent partial disability benefits when a compensable injury results in a permanent impairment covered by Minnesota law.

Permanent Total Disability: Certain severely disabled employees may qualify for permanent total disability benefits under applicable Minnesota requirements.

Dependency Benefits: Eligible dependents may receive benefits following a compensable work-related death.

Medical Benefits: Workers' compensation can provide medical benefits for compensable work-related injuries and illnesses.

Vocational Rehabilitation: Qualifying injured employees may receive vocational rehabilitation services intended to assist with returning to suitable employment.

Minnesota Workers' Compensation Rates

Minnesota workers' compensation benefit levels are separate from the employer's insurance premium rates. Benefit levels can change based on statutory adjustments and the applicable date of injury. Employers and payroll professionals should verify the rate applicable to the employee's injury date.

For injuries on or after October 1, 2025, the Minnesota statewide average weekly wage is $1,423. The maximum weekly benefit is $1,536.84 and the minimum weekly benefit is $307.37 under the applicable rate schedule.

Minnesota Workers' Compensation Medical Care

Workers' compensation medical benefits can cover appropriate medical treatment for compensable work-related injuries and illnesses. Payroll generally does not administer medical care, but payroll information can become relevant when an employee's medical status affects work hours, wages, modified duty, or return-to-work arrangements.

Payroll should coordinate with HR and the claims administrator when medical restrictions result in changes to an employee's schedule, duties, earnings, or employment status.

Minnesota Workers' Compensation And Modified Duty

An injured employee may return to work with restrictions when medically authorized. The employee may return to the regular position, a modified-duty position, or another position that complies with applicable work restrictions.

Payroll should accurately record regular wages, reduced hours, modified-duty earnings, overtime, bonuses, and other compensation after an employee returns to work. Accurate post-injury earnings can be important when determining applicable wage-loss benefits.

Document the employee's return-to-work date

Track work restrictions through the employer's HR and workers' compensation process

Track regular and modified-duty hours

Track post-injury wages

Track overtime and additional compensation

Document changes in pay or work schedule

Provide post-injury wage information when requested by the claims administrator

Update payroll records when the employee returns to regular duty

How Minnesota Payroll And Workers' Compensation Work Together

Workers' compensation and payroll are closely connected. When an employee is injured at work, payroll may need to provide historical earnings, hours worked, employment information, wage changes, and post-injury earnings.

Payroll may also become involved when an injured employee:

Misses work because of a workplace injury

Returns to work with medical restrictions

Works reduced hours

Performs modified or light-duty work

Receives wages after returning to work

Receives salary continuation or other employer-paid compensation

Experiences a change in compensation following an injury

Minnesota payroll departments should maintain a documented procedure for responding to workers' compensation claims and producing historical payroll and hours-worked information. Payroll should coordinate with HR, management, the employee's supervisor, and the workers' compensation claims administrator when an injury changes an employee's work status or compensation.

Training Resources

Workers' Comp - Workers' Recovery Professional Associate (WRPA) Certification

Recommended Workers' Compensation Training

How Workers' Compensation Works
Learn the fundamentals of workers' compensation, including claims, benefits, employer responsibilities, and return-to-work considerations.

Workers' Comp Premium Control: Experience Mods, Classifications, and Audit Mastery
Develop a stronger understanding of workers' compensation classifications, experience modification factors, premium management, and insurance audits.

Workers' Comp Workers' Recovery Professional Associate Certification
Build specialized knowledge for professionals involved in workers' compensation and employee recovery.

Other Help

Additional Minnesota Workers' Compensation Resources

Difficult Administrative Areas

Minnesota workers' compensation administration can become complicated when payroll, human resources, management, medical providers, insurance carriers, self-insured employers, claims administrators, and the Minnesota Department of Labor and Industry must coordinate information across different parts of an employee's claim.

Determining The Correct Wage Information: Payroll should maintain accurate historical wage and hours-worked information and provide the information requested by the insurance carrier or claims administrator.

Handling Employees With Multiple Jobs Or Pay Rates: Payroll should maintain clear records showing wages, hours, duties, classifications, and applicable pay rates.

Tracking Modified-Duty Employees: Payroll should separately document regular wages, reduced hours, modified-duty earnings, overtime, and other compensation after an injured employee returns to work.

Coordinating Workers' Compensation And Paid Leave: Payroll should maintain clear records of vacation, sick leave, PTO, salary continuation, and other employer-paid compensation during a workers' compensation claim.

Handling Return-To-Work Changes: Payroll should promptly update records when an employee returns to work, changes hours, performs modified duties, changes compensation, or returns to regular duty.

Maintaining Accurate Injury And Employment Records: Payroll records should be consistent with HR, timekeeping, employment, and workers' compensation records.

Managing Subcontractor Coverage: Employers and contractors should review subcontractor status and applicable workers' compensation obligations before assuming that a subcontractor's workers are outside the employer's coverage responsibilities.

Multistate Employees: Employers with workers performing services in multiple states should maintain accurate work-location records and coordinate workers' compensation requirements with HR and the appropriate administrator.

Responding To Payroll Information Requests: Claims administrators may request detailed wage and hours-worked information. Payroll should establish a standardized process for gathering, reviewing, and transmitting accurate information.

Protecting Confidential Employee Information: Payroll departments should limit access to employee medical, wage, and workers' compensation information to authorized personnel with a legitimate business need.

Keeping Procedures And Rates Current: Minnesota workers' compensation laws, benefit amounts, forms, reporting requirements, and administrative procedures can change. Payroll and HR departments should periodically review their procedures and verify current Minnesota requirements.

Common Errors

Minnesota workers' compensation mistakes often occur when payroll, HR, safety, and management do not have a consistent process for identifying, reporting, documenting, and administering workplace injuries.

Failing To Maintain Required Workers' Compensation Coverage: Employers should determine whether their workers are covered and maintain required insurance or approved self-insurance.

Incorrectly Excluding Part-Time Workers: Part-time status generally does not eliminate workers' compensation coverage.

Misclassifying Employees As Independent Contractors: Employers should not rely solely on a contract, job title, or Form 1099 when determining worker status.

Failing To Report An Injury Promptly: Delayed reporting can interfere with claim administration and required reporting deadlines.

Submitting An Incomplete First Report Of Injury: Payroll and HR should ensure that wage, employment, injury, and other required information is accurate and complete.

Using Incorrect Wage Information: Incomplete or inaccurate payroll and timekeeping records can interfere with the calculation and administration of wage-loss benefits.

Ignoring Post-Injury Earnings: Payroll should accurately record wages and hours after an employee returns to work, particularly when the employee works reduced hours or modified duties.

Failing To Track Salary Continuation And Paid Leave: Payroll should separately document employer-paid compensation, salary continuation, vacation, sick leave, and other paid leave following an injury.

Failing To Coordinate Multistate Employees: Employers should review workers' compensation requirements when employees regularly work in Minnesota and other states.

Using Outdated Benefit Information: Payroll and claims personnel should verify current Minnesota benefit amounts rather than relying on prior-year schedules.

Failing To Maintain Confidentiality: Workers' compensation claims may involve sensitive medical, wage, and employment information. Access should be limited to authorized personnel.

Failing To Meet Serious-Injury Reporting Deadlines: Fatalities and serious injuries generally must be reported to Minnesota DLI within 48 hours.

Recent Minnesota Workers' Compensation Developments

Minnesota workers' compensation requirements, benefit amounts, administrative rules, forms, reporting requirements, and rate information can change over time. Employers and payroll professionals should verify current requirements with the Minnesota Department of Labor and Industry when administering a claim or updating payroll procedures.

Frequently Asked Questions About Minnesota Workers' Compensation

Does Minnesota require employers to carry workers' compensation insurance?: Generally, yes. Minnesota generally requires employers to provide workers' compensation coverage unless a statutory exception applies.

How many employees must a business have before workers' compensation is required in Minnesota?: Generally, there is no minimum employee threshold. An employer with one part-time employee generally must provide coverage.

Are part-time employees covered by Minnesota workers' compensation?: Generally, yes. Part-time employees are generally covered unless a specific statutory exception applies.

Are seasonal employees covered by Minnesota workers' compensation?: Seasonal status alone does not necessarily eliminate coverage. Employers should review the applicable employment relationship and statutory exceptions.

Are corporate officers covered by Minnesota workers' compensation?: Coverage can depend on ownership, duties, and applicable statutory provisions. Employers should review Minnesota requirements before excluding an officer.

Are LLC members and managers covered by Minnesota workers' compensation?: Coverage depends on the individual's status and applicable statutory provisions. Employers should review the applicable ownership and management rules.

Are sole proprietors required to have workers' compensation insurance in Minnesota?: A sole proprietor's own status differs from the status of employees. A business with employees generally must provide required coverage unless an exception applies.

Are independent contractors covered by Minnesota workers' compensation?: The answer depends on the actual relationship and applicable Minnesota law. A contract, Form 1099, or job title does not by itself determine workers' compensation status.

How quickly should an employee report a workplace injury in Minnesota?: Employees should report workplace injuries to their employer as soon as possible. Minnesota law establishes specific reporting deadlines, and delays can affect a claim.

How long does an employee have to file a Minnesota workers' compensation claim?: Minnesota has statutory deadlines for filing claims, which can vary depending on whether the claim involves an injury, occupational disease, or other compensable condition. Employees should report injuries promptly and review the applicable deadline.

How are Minnesota workers' compensation benefits calculated?: Benefits depend on the type of benefit, the employee's wages and circumstances, medical findings, disability status, and other statutory requirements.

What is the Minnesota workers' compensation waiting period?: Minnesota generally has a three-calendar-day waiting period for wage-loss benefits. If disability continues for 10 calendar days or longer, compensation generally may be payable from the first day of disability.

What payroll records are important for a Minnesota workers' compensation claim?: Important records can include wages, hours worked, overtime, bonuses, commissions, employment dates, wage changes, job classifications, pre-injury earnings, post-injury earnings, modified-duty wages, salary continuation, paid leave, and other compensation information relevant to the claim.

What happens when an injured Minnesota employee returns to work?: An injured employee may return to regular or modified work depending on medical restrictions and the circumstances of the claim. Payroll should accurately track hours, wages, duties, restrictions, and changes in compensation.

Does Minnesota provide vocational rehabilitation for injured workers?: Yes. Minnesota workers' compensation provides vocational rehabilitation benefits for qualifying injured workers when appropriate to assist with returning to suitable employment.

What are Minnesota workers' compensation rates for 2026?: For injuries on or after October 1, 2025, the statewide average weekly wage is $1,423. The maximum weekly benefit is $1,536.84 and the minimum weekly benefit is $307.37 under the applicable rate schedule.

What are common Minnesota workers' compensation payroll mistakes?: Common mistakes include failing to maintain required coverage, incorrectly excluding workers, misclassifying workers, delaying injury reporting, submitting inaccurate wage information, failing to document post-injury earnings, overlooking modified-duty changes, and using outdated benefit information.

Where can employers find official Minnesota workers' compensation information?: Official information is available through the Minnesota Department of Labor and Industry, including information concerning coverage, claims, benefits, rates, forms, employer responsibilities, reporting, and self-insurance.