Who Needs to PA Workers Comp Insurance?
PA workers comp law indicates that every business owner who has employees needs to have an active workers comp policy in place. If your company is a corporation, this is an easy law to understand. You have probably had a workers comp policy for quite some time. But what if your company is a limited liability corporation (LLC) or a sole proprietorship? Do you need to have a workers comp policy?
PA workers comp only covers a company’s employees. In the case of an LLC, all the workers are considered partners, not employees. When this is the case, no workers comp insurance is needed. The partners’ health insurance will cover any work related injuries the partners may incur. However, partners sometimes withdraw themselves from partnerships and stay on as actual employees of the LLC. Also, LLCs sometimes do hire part time or full time employees. In both case, workers comp insurance is necessary.
Sole proprietors with no employees are not required to carry PA workers’ comp insurance. Sole proprietors have no employees on their payroll, so a workers comp policy isn’t necessary. When hiring sub-contractors as a sole proprietor, you must provide your insurer with detailed information regarding the sub-contractor’s independence or he may be charged as an employee. If no documentation can be produced, you can be charged for the sub-contractor’s payroll and have to pay workers comp premium to cover the sub-contractor.
Basically, if you have employees on your payroll, workers comp coverage is a must. Your employees need to be covered for any work related injury or illness that could possibly happen. If you hire sub-contractors, require their insurance paperwork before allowing them to work on your job. If you are still unsure if your business needs PA workers comp, contact your insurance agent or the PA Department of Labor & Industry to find out.