June 14, 1977

Mr. Dennis W. Finch, Secretary 
Department of Labor 
Capitol Lake Plaza 
Pierre, South Dakota 57501

Official Opinion No. 77-49

Definition of “employer” under Worker's Compensation Law

Dear Mr. Finch:

You have requested an opinion on the following factual situation:

FACTS: 

In 1966, the Legislature passed SDCL 58-20-3 which reads as follows: 
     
Any insurer authorized or which may be authorized to write workmen's compensation insurance in this state, shall be and is hereby authorized to issue policies covering employers who perform labor incidental to their occupations as well as employees, such policies insuring to such employers the same compensation as provided for their employees and at the same rates.  The estimation of wage values of employers as herein mentioned, shall be reasonable and separately stated in and added to the valuation of their payrolls on which their premiums are computed.  Employers so insured shall have the same rights and remedies as are given to any employee under title 62.

In 1975, SDCL 62-1-3 was amended to include employer in the definition of “employee” for purposes of eligibility for worker's compensation coverage. This clarified any doubt as to the right of “employers” to be covered under worker's compensation insurance policies.

The matter now has been brought to my attention as to whether sole proprietors or partners not employing others are eligible employers for worker's compensation insurance coverage as they do perform labor incidental to their occupation.

QUESTION: 

Do SDCL 58-20-3 and 62-1-3 apply to sole proprietors, partners, etc., who have no employees?

In my opinion, the answer to your question is no.  The concept of worker's compensation coverage is based on an actual employee-employer relationship. Schumacher v. Schumacher, 288 N.W. 796.  The amendments to SDCL 58-20-3 and 62-1-3, referenced in your factual situation, have legislatively enlarged the scope of coverage to include “employers who perform labor incidental to their occupations as well as employees.”  However, these amendments did not remove the language or the direct implication that coverage was intended only for “employers” with employees.  Even more persuasive is the fact that the general definition of “employer” found in SDCL 62-1-2 was not amended.  By that definition, an employer is one “using the service of another for pay.”

The conclusion I must reach is that a sole proprietor, partner, etc., is not eligible for worker's compensation coverage pursuant to SDCL 62-1-3 and 58-20-3 if he does not employ others for pay.  Such persons may get comparable coverage from other insurance policies with loss of income or similar provisions.

Respectfully submitted,

William J. Janklow
Attorney General

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