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CareersChanges for Contractors: Minnesota’s Zero Exposure Work Comp Law
Starting January 1, 2026, Minnesota's workers' compensation system will be updated, placing new responsibilities on construction contractors. The new law focuses on “zero estimated exposure policies” (often referred to as “if-any” policies) and aims to create more transparency and accountability within the construction industry.
What is a Zero Estimated Exposure Policy?
A zero estimated exposure policy allows businesses to report no payroll because they often operate without employees. Sole proprietors or small contractors who subcontract their work frequently use this policy. While it can save money on insurance costs, it carries risks such as a lack of coverage and the possibility of misleading practices.
Key Changes Under the New Law
Under the new legislation, contractors who obtain a zero estimate exposure policy must:
- Provide a signed attestation to their insurance carrier confirming they do not have employees or payroll
- Notify contracting partners about their zero exposure policy status in writing
- Share their insurance policy with every entity they contract with for construction services
- Notify their insurance company within 60 days if they hire employees or begin to incur payroll expenses
Why This Matters for All Contractors
Contractors who hire subcontractors for construction services who use a zero estimated exposure policy must:
- Obtain written notice confirming that the subcontractor uses a zero estimated exposure policy and receive a copy of this policy
- Retain the notice and the policy copy for three years from the date they are received
This is especially important given the new law, which states that if an individual working on a project is injured and there is no insurance coverage, the contractor may be held liable for the injury.
Additionally, contractors will need to review and update contracts to ensure compliance with the new disclosure requirements. This includes incorporating clauses that require subcontractors to provide proof of workers' compensation coverage and to notify of any changes.
The Minnesota Department of Labor and Industry will have an updated tool to check whether a contractor has a zero estimated-exposure policy once the law becomes effective. For more details, visit the official page here.
What You Can Do Now
This law is part of a larger effort to protect workers, reduce fraud, and ensure fair competition in the Minnesota construction industry. By improving transparency, it aims to help project owners and contractors identify potential coverage gaps early on, minimizing conflicts and legal troubles later.
To prepare for these changes, review your insurance policies and update your internal processes. It's recommended to consult with your legal advisors to ensure compliance with the new law before it takes effect. At North Risk Partners, we're here to help you navigate these changes and ensure your business stays compliant and protected.
If you have questions about the Minnesota Zero Estimated Exposure Workers' Compensation Law, please contact your North Risk Partners advisor. Don’t have an advisor? No problem. We’ll help you find one.
This blog was written in partnership with Hellmuth & Johnson. Hellmuth & Johnson, a Top 15 Minnesota law firm, represents clients ranging from individuals and emerging start-ups to multinational Fortune 500 companies. The firm specializes in contract law, transactional law, litigation, and more. Founded in 1994, Hellmuth & Johnson has become one of Minnesota’s fastest-growing law firms.
This provides general information and does not constitute legal advice. The laws and regulations change frequently, which means the information provided herein may be outdated.