Do I Need Workers’ Compensation if I’m Self-Employed in Pennsylvania?

Whether you’re running a small construction company in Philadelphia or working as a freelance consultant in Pittsburgh, you need to understand Pennsylvania’s workers’ compensation requirements. Knowledge is essential for protecting both your business and your personal well-being. Many self-employed professionals believe they can opt out of workers’ compensation coverage, but workers’ comp insurance is not that simple.

If you run a self-employed business with no other employees, workers’ comp coverage is generally optional for you. However, as soon as you hire one employee, Pennsylvania law generally requires you to maintain workers’ comp coverage. The Pennsylvania Workers’ Compensation Act provides coverage requirements for all employers. Requirements can vary by industry, business structure, and whether you work with subcontractors.

Self-employed workers should also consider the impact of an accident. A single workplace injury without proper coverage could result in substantial medical bills and lost income, potentially threatening the business you’ve worked so hard to build.

If you’re unsure how workers’ comp laws affect your business or you need help filing a claim, call the experienced workers’ compensation attorneys at Munley Law for a free consultation about your situation.

Understanding Pennsylvania Workers’ Compensation Law

The Pennsylvania Workers’ Compensation Act lays out the requirements for all businesses and business owners in the state. Established in 1915, the law has evolved to address the changing needs of Pennsylvania’s workforce, including self-employed individuals and independent contractors. The law requires most businesses with employees to carry workers’ compensation insurance, but the rules for self-employed individuals depend on several factors.

For self-employed individuals, the type of business — sole proprietorship, LLC, or corporation — plays an important role. Sole proprietors, for example, are not required to carry workers’ compensation insurance for themselves. Any business that has employees, however, must provide coverage. Some industries also have unique requirements, notably the construction industry as discussed below.

Workers’ comp insurance protects you not only legally, but also financially, in the event of a workplace accident. Any injury can result in expensive medical expenses and lost wages during recovery. A self-employed worker without coverage must pay these costs out of pocket. If your health insurance excludes work-related injuries, this can lead to a devastating gap in financial and physical protection.

The Pennsylvania workers’ comp system can be confusing and one misstep can result in a heavy financial burden. Munley Law can help you understand if you need to purchase workers’ compensation insurance. Our workers’ comp lawyers can help you understand the pros and cons of insurance, in addition to your legal responsibilities. Call us today for a free consultation. Our attorneys can help you make an informed decision about your coverage needs.

Industry-Specific Exemptions

The construction industry has stricter requirements under Pennsylvania law. The Construction Workplace Misclassification Act requires even self-employed contractors to maintain workers’ compensation coverage. This applies whether you work independently or hire subcontractors. Every self-employed construction professional, from general contractors to specialized trade workers, must be insured. The law aims to protect against the high injury risks inherent in construction work.

Other exemptions include federal employees, longshoremen, railroad workers, and other who are covered under another workers’ comp act.

Self-Employed Workers’ Comp Coverage Requirements in Pennsylvania

Most sole proprietors and independent contractors can choose whether to carry workers’ compensation insurance for themselves. For many self-employed workers, the workers’ comp insurance question can be answered based on whether you have employees. The moment you hire an employee, even one part-time worker, you are required to carry workers’ comp insurance.

Many businesses work with independent contractors or 1099 workers. These workers are generally not entitled to workers’ comp benefits. However, misclassification does occur, both accidentally and intentionally.

Additionally, running a business from home doesn’t exempt you from these requirements. If you hire employees to work for your home-based business, you must still provide workers’ comp benefits. Employees are entitled to coverage, whether they work on-site or remotely.

Businesses can buy workers’ comp insurance through a broker, directly from a carrier, or through the State Workers’ Insurance Fund. Some businesses may qualify for self-insured status.

What are the penalties for failing to maintain workers’ compensation coverage?

Pennsylvania has severe penalties for operating without required workers’ compensation insurance. Fines start at $2,500 per day of violation. Business owners may face civil lawsuits from injured workers and criminal charges in cases of intentional non-compliance. Additionally, many business contracts require proof of workers’ compensation coverage. Failure to maintain coverage could hurt your business. Carrying minimum coverage requirements is often cheaper than the penalties.

It can be confusing to know your coverage requirements, but Munley Law’s workers’ compensation attorneys have decades of experience with Pennsylvania’s laws. We will meet with you for a free consultation to understand your situation and your legal options.

Using Self-Employed Workers’ Compensation Insurance in Pennsylvania

Work-related injuries in Pennsylvania must be reported within 21 days, though you can report up to 120 days in certain circumstances. As a self-employed individual, you’ll need to document both the injury and its connection to and impact on your work activities.

Your claim starts with notifying your insurance company about your injury. You’ll need to provide medical documentation, proof of lost income, and evidence that the injury occurred during work-related activities. Your insurance policy will determine how much flexibility you have in choosing a medical provider. Even if you must see someone other than your usual provider, seeking medical treatment for your injury is crucial to your claim.

Your insurance company will review your claim and either approve or deny benefits. If denied, you can appeal through the Pennsylvania Workers’ Compensation Bureau. Both the initial claim and the appeal processes are specific in deadlines and procedures. Failure to meet even one can lead to a denied claim.

Even a straightforward claim can become a legal battle for your rights. Munley Law’s workers’ comp lawyers can guide you through the process and make sure you recover what you are owed.

Should I Buy Workers’ Comp Insurance in Pennsylvania?

Now that your know whether you are required to carry workers’ comp coverage, you may have to choose whether to buy a policy. If you work in a high risk industry or otherwise have reason to believe a work-related accident may be likely, a workers’ comp policy may be a good idea. It will provide financial assistance with medical bills, lost wages, and other injury-related expenses. Only you can make the ultimate decision, but several resources can help you make an informed choice.

The Pennsylvania Department of Labor & Industry is a comprehensive collection of online tools, forms, and documents. The department also houses the Bureau of Workers’ Compensation and a database for finding insurance provider and coverage information. The Pennsylvania Small Business Development Centers provide free consultations about workers’ comp requirements, as well as other educational materials. These centers can help you understand how coverage fits into your overall business plan and budget.

Finally, consulting with an experienced legal team before a work-related injury occurs can be a financial protection. Munley Law keeps current with Pennsylvania’s laws and regulations so that we can provide our clients with a clear legal path forward. Our workers’ comp attorneys will meet with you for a free consultation to discuss your situation and your business insurance needs. Call us today and let us help you protect your health and your business.