Workers’ compensation insurance laws and requirements for employers vary from state to state, but private employers can generally choose whether to carry workers' compensation insurance coverage. A workers' compensation insurance policy provides lost wages and medical benefits to employees injured on the job—and death benefits for the spouse and dependents (children) of a worker who dies in a work-related accident.

Under workers’ compensation laws in many states employers who subscribe to workers’ compensation insurance receive a significant legal protection—they cannot be sued by an injured employee (or the estate of a deceased employee) unless the employer was grossly negligent (more negligent than simple, ordinary negligence).

In other words, if an employer has workers’ compensation insurance, that is usually the exclusive remedy for an injured employee (known as the exclusive remedy provision in the statute), and the insurance coverage bars an injured employee from suing the employer (known as the workers’ compensation bar).

An employer who does not purchase or subscribe to workers’ compensation insurance is known as a nonsubscriber. Workers’ compensation laws are usually located in a state’s statutes.

In South Dakota, workers' compensation insurance is mandatory for most employers. The South Dakota Workers' Compensation Law requires that any employer who has one or more employees, whether part-time or full-time, must provide workers' compensation insurance. This insurance covers medical expenses, lost wages, and rehabilitation costs for employees who are injured on the job, as well as death benefits for dependents of workers who have died as a result of their employment. The law provides what is known as the 'exclusive remedy' for injured workers, meaning that in most cases, employees cannot sue their employers for work-related injuries if the employer has workers' compensation insurance. Instead, they are limited to the benefits provided under the workers' compensation system. There are exceptions to this rule, such as in cases of intentional acts or gross negligence by the employer. Employers in South Dakota who fail to provide workers' compensation insurance may face penalties and are exposed to the risk of being sued by injured employees.