Expert answers to all your business insurance questions.
Is workers’ comp required for my Pennsylvania business?
The short answer: if you have an employee on your payroll, you need workers’ comp. Even if you only have one employee, you must have worker’s comp. That counts for full-time, part-time, and seasonal workers.
More importantly, this doesn’t just apply to workers in Pennsylvania, but any worker under contract in Pennsylvania. This means that even a worker who travels or works outside Pennsylvania, the US, or Canada—but who is hired by a Pennsylvania company—must have worker’s comp.
That casts a pretty wide net, doesn’t it? Basically, if you even have one employee under contract in Pennsylvania—under any sort of hourly or seasonal arrangement—you must have coverage. In Pennsylvania, workers’ comp is based not so much on where the employee is working as much as where the company is located and where the employee is under contract.
Are there any exceptions to the workers’ comp requirement?
In Pennsylvania, certain types of professions don’t require worker’s comp, including federal workers, railroad workers, certain home-based business workers, certain kinds of real estate agents, and certain types of farm laborers. These are just a few examples. (You can find more details on these outlier professions here.)
Keep in mind: At least one of these exceptions would have to apply to all your employees for your company to be completely excluded from workers’ comp. If even one of your employees doesn’t fit the criteria for one of these exceptions, you need to have coverage.
There is an exception for “casual workers” that gets a little fuzzy in translation. This exception applies to workers who are only minimally involved with company business. If you’re unsure whether your employees fall into this category, the PA Department of Labor and Industry Workers’ Compensation Employer Information Sheet recommends consulting an attorney just to be sure. If anything is still unclear, it’s probably best to be safe and keep your business insured just in case.
What about an LLC?
If you run an LLC, you and any other partners are not required to have workers’ comp.
However, if one of the partners backs out of ownership—but would like to continue working as a regular employee—they will need workers’ comp immediately. Also, should the LLC hire a part-time, full-time, or seasonal employee, or even an employee who is related to one of the partners, this employee must have workers’ comp. So, even if you don’t need this coverage right now, you might need it in the future depending on how your business expands.
What about a sole proprietorship?
While sole proprietors are not required to have workers comp for themselves, you might still want to buy coverage. Compare with your regular insurance coverage to see if it’s worth the investment. Most likely, the benefits from life, health, and other insurance are enough for most sole proprietors. (Additionally, some insurers do not underwrite workers’ comp policies for sole proprietors. You’ll need to contact the company you’re interested in for more details.)
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