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’ compensation 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.
If you need to purchase workers’ compensation 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.
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.
To reduce premium costs, Pennsylvania small businesses might consider:
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.
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 will receive an Experience Modifier, which alters their premium based on the employer’s loss history.
Editor's note: Last updated on June 11, 2018.