Worker's Compensation Insurance Coverage for Farmers - If your hired farm laborer looks like an employee, works like an employee, gets paid like an employee, you've probably got an employee!

tom-christen-new.jpgFarmers sometimes hire on farmhands or laborers when their operations grow. However, busy farmers may not consider the potential need for workers' compensation insurance coverage until someone gets hurt and medical bills, disability payments and other forms of compensation must be paid. Some may be surprised especially if the farmer hasn't needed to carry worker's compensation coverage in the past because only family members were working on the farm.

When things begin to change in your farm operation, review your insurance policies. A farm liability insurance policy will not cover injuries to a farm laborer who meets the Minnesota Workers' Compensation statutory definition of "employee." If a farm laborer sustains a work-related injury and the farmer has no Worker's Compensation coverage, the Minnesota Department of Labor & Industry (Special Compensation Fund) ("MN DOLI - SCF") may pay the workers' compensation benefits for the injured laborer and seek reimbursement directly from the farmer. The MN-DOLI & SCF may also seek to impose penalties on the farmer for failure to have workers' compensation insurance in place at the time the employee was injured. Minnesota statutes require qualified employers to purchase worker's compensation insurance coverage for their employees. Even a farmer is considered a qualified employer if the farming operation meets certain criteria.

If all employees on a farm earn less than $8,000 per calendar year, the Minnesota Workers' Compensation scheme doesn't require the farmer to carry worker's compensation insurance. According to Minn. Stat. § 176.041, subd.1(b), the Worker's Compensation Act doesn't apply to persons employed by a "family farm" as defined by Minn. Stat. § 176.011, subd.11(a)(1-2)(2010). However, if a farmer hires farmhands or laborers who earn (in aggregate) more than $8,000 annually, the farmer is required to carry worker's compensation insurance. Essentially, farmers are allowed one year to begin worker's compensation coverage once they employ qualified farm laborers making more than a total of $8,000 in a calendar year.

A recent case involved a family farmer who wanted to cut back his hours on the farm. He hired a farm hand to assist his son in running the crop farming operation. During harvest, a piece of equipment broke down. While driving back to the farm to get another machine, the truck that the farmer, farmer's cousin and the farm hand were riding in lost control and went off the road, causing all three serious injuries. The farmer didn't have worker's compensation insurance in place, and was a workers' compensation claim was brought for medical expenses and damages sustained by the farmhand. In a Worker's Compensation Court of Appeals decision, the WCCA held that the farmer was not required to carry such insurance as it was the first year he had hired a farm worker. The farmer avoided paying penalties and damages that would have been in the six figure range.

No one expects bad things to happen on their family farm, and certainly nobody is happy when they do. Be careful to check whether you need to add worker's compensation insurance coverage when hiring farmhand or laborer. You may avoid unnecessary fees, expenses and penalties imposed by the state.

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