Nearly all Pennsylvania employers must carry workers’ compensation insurance. This means small businesses who have one or more employees must have an active workers’ compensation insurance policy for their current payroll.
Below we outline workers’ compensation requirements, rates and where to purchase coverage.
In general, employers must have workers’ comp insurance in Pennsylvania. This includes any employees working in Pennsylvania, whether part-time or full-time, and unlike some states, this also includes family members.
What about independent contractors? As of 2011, the Construction Workplace Misclassification Act (also called Act 72) makes misclassification of employees as independent contractors illegal for all commercial and residential construction in Pennsylvania.
This law also establishes a narrow definition of “independent contractor.” Employee or an independent contractor? See general guidelines here.
Other exceptions: Pennsylvania has very few exceptions for employers. A business may be exempt from providing coverage if all workers can be described as one of the following:
To ensure you’re in compliance with state law, talk to an insurance rep familiar with Pennsylvania’s work comp system.
Failure to provide proof of workers' comp insurance can expose a small business to legal and financial liability. The employer may need to cover medical expenses out of pocket, an injured employee may be able to sue for negligence, and the state may impose fines or disbar the business from public work contracts.
Penalties for non-compliance in Pennsylvania could result in fines of $2,500 for each day the employer is in violation, and up to one year in prison. Felony convictions could mean a $15,000 fine for each day the employer intentionally violated state workers' comp laws, and up to seven years prison.
If you need to purchase workers’ comp insurance in Pennsylvania, you have a few options:
An insurance agent or broker. Pennsylvania has a private workers’ compensation market. You can purchase a workers' compensation policy from any private insurance carrier or agency that is licensed to write in that state. Get started on a policy with WorkCompOne >>
The state fund. Pennsylvania also has a state fund that competes with the private market. You can contact the State Workers’ Insurance Fund if you are unable to secure coverage from a private insurance carrier. As a state agency, SWIF is required to provide coverage to any Pennsylvania business. Contact the state fund for up-to-date SWIF rates.
Self-insurance. Some large, financially healthy businesses may be eligible to self-insure.
To get covered, contact a licensed insurer. You can get a quote within several business days, or as little as a few hours.
Remember: Your workers’ compensation policy is only in effect within Pennsylvania. If your employees travel across state lines to work, make sure you comply with their work comp requirements.
Changes in the state work comp system have largely centered around premium costs and over-prescribing. State legislature and work comp agencies have been debating how to treat worker injuries while combating rising rates of opioid addiction - a crisis that cost the state nearly $54 billion in 2016.
Most states use the National Council on Compensation Insurance (NCCI) to collect workplace data and set rates. Pennsylvania has its own agency, the Pennsylvania Compensation Rating Bureau, that like NCCI, collects loss, premium and payroll data, and recommends workers’ compensation rates.
According to a report by the Oregon Department of Consumer and Business Services, 2018 PA workers' compensation insurance rates were 17th in the nation. Pennsylvania employers can expect to pay between $1.50 and $1.99 per $100 in payroll.
The minimum individual payroll for an officer is $1,025 per week, according to the most recent underwriting guidelines issued by the Pennsylvania Compensation Rating Bureau. The maximum officer payroll for workers compensation is $2,550 per week, with a few class code-specific exceptions.
How much is workers' comp insurance in PA? In short, cost is dictated by the size of the company's workforce and the type of work employees do.
Work comp costs vary based on business size, location, industry and claims history. Rates are set for each class code, or industry. This base rate is multiplied by company payroll, and then other discounts may be applied by an insurance carrier to calculate the final premium. Businesses with premiums of at least $10,000 may receive an Experience Modifier, which alters their premium based on the employer’s loss history.
To reduce premium costs, Pennsylvania small businesses might consider:
For more information:
Editor's note: Last updated on December 12, 2018.