Minnesota's Zero Estimated Exposure Workers' Comp Law (2026)

Minnesota enacted significant changes to its workers' compensation insurance requirements for zero estimated exposure (zero-exposure) policies, effective January 1, 2026. The legislation-codified primarily at Minn. Stat. § 176.1781-responds to widespread problems with businesses misusing these policies to avoid proper workers' comp coverage.

If you are a sole proprietor, independent contractor, general contractor, subcontractor, or insurer, these changes affect you directly.

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What is a zero estimated exposure policy?

A zero estimated exposure policy is a workers' compensation insurance policy issued to a business that attests it has no employees and no payroll. These policies are typically purchased by sole proprietors or single-member LLCs who need a certificate of insurance (COI) to satisfy hiring requirements on construction sites or other contract work.

The problem: some businesses that actually have employees purchase zero-exposure policies to avoid the higher premiums of a standard workers' comp policy. When one of those uninsured employees gets hurt on the job, there may be no meaningful coverage-leaving the worker, the hiring contractor, and the insurer in a difficult position.

The 2026 law is designed to close that gap.

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Key requirements of the new law

1. Attestation requirement

Under the new statute, any policyholder applying for or renewing a zero estimated exposure policy must sign a written attestation confirming that:

• The policyholder has no employees as defined by Minn. Stat. § 176.011, subd. 9
• The policyholder does not anticipate hiring employees during the policy period
• The policyholder understands that misrepresentation may result in policy cancellation and other consequences

Insurers must collect this attestation before issuing or renewing the policy. A zero-exposure policy issued without a completed attestation does not comply with the statute.

2. 60-day notification requirement

If a policyholder who holds a zero estimated exposure policy hires an employee during the policy period, the policyholder must notify the insurer within 60 days. Upon notification, the insurer must:

• Convert the policy to a standard workers' comp policy with appropriate premium
• Adjust coverage retroactively to the date the employee was hired

Failure to notify within 60 days can result in a gap in coverage and potential liability for the employer.

3. Contractor and subcontractor verification

General contractors and hiring entities now have affirmative verification obligations when engaging subcontractors who present a zero-exposure certificate of insurance:

• The hiring entity must make reasonable efforts to verify that the subcontractor's coverage is appropriate for the work being performed
• If the subcontractor actually has employees on the job, a zero-exposure COI is a red flag-the hiring entity cannot simply accept it at face value
• Hiring entities that fail to verify may face statutory liability for injuries to the subcontractor's uncovered employees under Minn. Stat. § 176.215

In construction, this means general contractors should confirm that every sub on site either (a) genuinely has no employees and holds a valid zero-exposure policy with a current attestation, or (b) carries a standard workers' comp policy covering all employees.

4. QR code mandate for certificates of insurance

All certificates of insurance for workers' compensation policies-including zero-exposure policies-must now include a QR code that links to a real-time verification page maintained by the insurer or a designated verification system.

The QR code must allow the person scanning it to confirm:

• The policy is currently active (not cancelled or expired)
• The type of policy (zero-exposure or standard)
• The named insured matches the entity presenting the certificate

5. Penalties for non-compliance

The statute establishes penalties for violations:

Violation	Consequence
Insurer issues zero-exposure policy without collecting attestation	Subject to regulatory action by the Minnesota Department of Commerce
Policyholder fails to notify insurer within 60 days of hiring an employee	Coverage gap; potential policy cancellation; employer remains liable for injuries
Policyholder misrepresents employee status on attestation	Policy cancellation; potential fraud referral; personal liability for claims
Hiring entity fails to verify subcontractor's coverage	Statutory liability for injuries to subcontractor's uncovered employees
COI issued without required QR code	Non-compliant certificate; insurer subject to corrective action

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What you should do now

If you are a sole proprietor or independent contractor

• Review your policy. If you have a zero-exposure policy, confirm that your insurer has collected a signed attestation for the current policy period.
• Report changes immediately. If you hire any employee-even part-time or temporary-notify your insurer within 60 days to maintain coverage.
• Check your COI. Make sure your certificate of insurance includes the required QR code before presenting it to a hiring entity.

If you are a general contractor or hiring entity

• Update your subcontractor verification process. Do not accept a zero-exposure COI at face value if the subcontractor will have workers on your site.
• Scan the QR code. Use the real-time verification link to confirm active coverage before allowing work to begin.
• Document your verification. Keep records showing that you checked coverage. This documentation protects you if a coverage dispute arises later.

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Resources

• Minn. Stat. § 176.1781 - Zero estimated exposure policy requirements
• Minn. Stat. § 176.215 - Liability of general contractors for subcontractor injuries
• Minnesota DLI Workers' Compensation page - General information and compliance resources
• Minnesota Department of Commerce - Insurance regulatory oversight

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Frequently asked questions

What is a zero estimated exposure workers' comp policy?

It is a workers' compensation insurance policy where the policyholder attests that they have no employees and no payroll exposure. These policies are common among sole proprietors and independent contractors who need a certificate of insurance to get hired but do not employ anyone. The new law adds formal attestation requirements to ensure the representation is accurate.

When does the new zero-exposure law take effect?

The law is effective January 1, 2026. It applies to all new and renewed zero estimated exposure policies issued on or after that date. Policies issued before that date are not retroactively affected, but will need to comply upon renewal.

What happens if a policyholder misrepresents their employee status on the attestation?

Misrepresentation on the attestation can result in policy cancellation, denial of claims, and potential fraud referral. The hiring entity may also face statutory liability for injuries to the policyholder's uncovered employees if the hiring entity failed to verify coverage appropriately under Minn. Stat. § 176.215.