Does a South Dakota township have the legal authority to buy workmen's compensation insurance for its township employees, including township officers and the board of supervisors?
Plain-English summary
A township in Turner County had bought a workmen's compensation insurance policy for its employees. When questions arose about whether the policy had been properly renewed, a more fundamental question came up: could the township have bought the policy in the first place? Townships in South Dakota are political subdivisions with only the powers expressly delegated by the state or necessarily implied from those expressed powers. Nothing in the township statutes expressly said townships could buy workers' compensation insurance.
The AG looked elsewhere and found the answer in the Workmen's Compensation Law itself. SDC 1939 64.0106(5) stated: "This state or any municipality or other political subdivision of the state need not furnish any insurance or security as provided by this section, but may do so if it desires." The same section went on to deem any private employer that did not comply to have elected out of the Act, but the state, municipalities, and other political subdivisions were explicitly given the choice.
The AG read 64.0106(5) as a statutory invitation. The Workmen's Compensation Law was telling political subdivisions: you do not have to buy this insurance, but you may. That permissive language carried the implied power to buy. The township's authority did not come from a township statute; it came from the Workers' Compensation statute itself.
The AG buttressed the conclusion with a 1930-32 opinion (1930-32 AGR 476-7) that had reached the same result under analogous workmen's compensation provisions. That earlier opinion had said the question of whether to carry workers' comp and public liability insurance "is largely a matter of policy to be left with said township board." The 1968 AG concurred. There was also a 1945-46 AGR 39 opinion granting similar authority to counties.
The coverage could extend to all township employees, including the township officers and the board of supervisors. The opinion did not draw a distinction between elected officers, appointed officers, hired employees, or contract workers; everyone working for the township was eligible to be covered under a township-purchased policy.
Currency note
This opinion was issued in 1968. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. South Dakota's workers' compensation law has been substantially restructured since 1968, with the modern framework in SDCL Title 62 (Workers' Compensation). The political-subdivision election provisions and the coverage rules have evolved. A township considering workers' comp coverage today should consult the current SDCL framework and applicable Department of Labor and Regulation rules.
What the opinion meant at the time
For township boards in 1968, the opinion gave clear legal cover to buy workers' compensation insurance. Boards no longer had to worry that the purchase exceeded their authority. The decision was now framed as a policy choice (is the premium worth the coverage?) rather than a legal question.
For township employees and officers, the opinion confirmed that they could be covered by a township-purchased policy. That was meaningful protection: in 1968 a road grader operator hurt on the job, or a township clerk injured in the township office, would have had limited recovery options absent workers' comp coverage. Township-purchased coverage closed that gap.
For insurance brokers serving rural areas, the opinion was a marketing aid. They could now sell workers' comp policies to townships without legal-authority objections from skeptical board members or attorneys.
For county officials watching township practices, the opinion fit alongside the 1945-46 AGR 39 authority for counties to buy similar coverage. The result was a consistent regime: state, county, municipal, and township governments all had implied authority to buy workers' comp insurance under SDC 64.0106(5)'s permissive grant.
For employees considering whether to pursue traditional negligence suits against the township instead of workers' comp benefits, the opinion was indirectly important. If the township had bought coverage, the workers' comp exclusive-remedy doctrine would likely have applied, channeling claims through the workers' comp system. Without coverage, traditional tort suits might still have been available, although township sovereign immunity and other doctrines would have complicated those claims.
Common questions
Q: Did the township have to bid out the insurance contract under public contracting laws?
A: The opinion did not address procurement procedures. Township insurance contracts of meaningful size might have been subject to public bidding rules; smaller premiums might have been below the bidding threshold.
Q: Could the township require employees to contribute toward the premium?
A: The opinion did not address that. As a matter of practical workplace policy, some township boards might have shared premium costs with employees; others might have absorbed the full cost.
Q: Were elected township officers (supervisors, treasurer, clerk) "employees" for workers' comp purposes?
A: The AG said the coverage could include "township employees including township officers and the board of supervisors." That was a clear inclusion. The workers' comp policy itself would have defined "employee" for its own purposes, and the policy could have included or excluded officers as the township board chose.
Q: What if the township did not buy workers' comp insurance and an employee was injured?
A: The Workmen's Compensation Law's deeming provision (treating non-complying private employers as electing out) did not apply to political subdivisions. So the township would not be automatically considered an "elected out" employer. The injured employee's remedies would depend on township negligence, sovereign immunity, and any specific township benefits available.
Q: Could the township buy public liability insurance under the same reasoning?
A: The 1930-32 AGR 476-7 opinion cited by the AG had addressed both workers' comp and public liability insurance, treating them similarly as policy choices for the township board. So the implied power likely extended to public liability coverage too.
Q: What did "133 N.W.2d 860" refer to?
A: The opinion cited that reporter citation in passing for the proposition that townships have only delegated or necessarily implied powers. The specific case name was not given in the opinion text. The reporter citation (North Western Reporter, Second Series) was a state court decision; the surrounding case-law context (South Dakota Supreme Court applying the township-powers rule) was the AG's likely source.
Background and statutory framework
Townships in South Dakota are organized political subdivisions, typically covering a six-mile-square area outside city limits and providing rudimentary local services: road maintenance, sometimes a township hall, occasionally small-scale fire or emergency response. Township government is run by a three-member board of supervisors, with a clerk and treasurer in addition. Most townships have very small budgets.
The implied-powers doctrine, articulated in 133 N.W.2d 860 (the South Dakota case the AG cited) and in many similar decisions across the country, limits township authority to powers expressly granted by the state legislature plus those necessarily implied from express grants. The doctrine forces the question: did the legislature mean to authorize this?
For workers' compensation insurance, the answer came from a slightly oblique source: the Workmen's Compensation Law itself. SDC 64.0106(5) treated political subdivisions differently from private employers. Private employers had to participate in workers' comp unless they affirmatively elected out (and faced consequences for not participating). Political subdivisions were given the choice up front: participate or not, as you wish.
That permissive grant carried with it the practical authority to buy insurance. As a matter of statutory construction, the legislature presumably expected political subdivisions that wanted to provide coverage to buy commercial policies (or self-insure), since that was how workers' comp coverage was typically provided. The choice to participate logically included the choice of how to participate, including buying insurance.
The 1930-32 AGR opinion cited by the 1968 AG had reached the same conclusion under earlier versions of the workers' comp statute. That historical continuity strengthened the 1968 reading: the AG's office had said yes to township workers' comp authority for nearly four decades, and the legislature had not changed the relevant statutory framework to say otherwise.
Citations and references
Statutes:
- SDC 1939 64.0106(5) (Workmen's Compensation Law; political subdivision election)
Cases:
- 133 N.W.2d 860 (cited for the township implied-powers principle)
Prior AG opinions:
- 1930-32 AGR 476-7 (similar authority for township workers' comp and public liability insurance)
- 1945-46 AGR 39 (similar authority for counties)
Source
Original opinion text
Townships. Authority of Townships to insure employees.
You have requested an official opinion based upon the following factual situation:
"A question has been presented to our office concerning the cancellation of a workmen's compensation policy providing coverage for certain employees of a township in Turner County. In researching the question as to whether or not there was a renewal contract, a question has arisen as to whether or not the township could contract for a policy of workmen's compensation insurance in the first instance."
You then asked the following question:
"Are townships empowered to enter into contracts providing workmen's compensation coverage for township employees, including township officers and the board of supervisors?"
A civil township is a political subdivision of state government and has only such powers as are expressly delegated by the state or are necessarily implied from expressed delegated powers (133 NW 2d 860).
Nowhere in the statutes of this state governing townships, is the power to contract for Workmen's Compensation expressly granted.
However, Section 64.0106 5 of the South Dakota Workmen's Compensation Law, SDC 1939, states:
"This state or any municipality or other political subdivision of the state need not furnish any insurance or security as provided by this section, but may do so if it desires."
Quoting further:
"Any employer other than the state, a municipality, or other political subdivision of this state, who has failed to comply with the provisions of this section shall be deemed to have elected not to operate under the provisions of this title."
It would appear that a township has the implied power to contract for Workmen's Compensation. The facts show a township had contracted for and in fact received coverage under Workmen's Compensation as prescribed by the above cited statute. The township, then, exercised a prerogative which, in my opinion, results from said statute.
Further support of this holding is evidenced in 1930-32 AGR 476-7 whereby under similar statutes as those embodied in the present Workmen's Compensation Law, an opinion was issued which states in part:
"It is my opinion that the question of whether township boards should carry public liability and Workmen's Compensation insurance is largely a matter of policy to be left with said township board."
I concur in this opinion.
It is therefore, my opinion that townships are empowered to enter into contracts providing Workmen's Compensation coverage for township employees including township officers and the board of supervisors.
See also, 1945-46 AGR 39 for similar authority granted to the county.