Pennsylvania has taken steps to reduce employer workers’ compensation insurance costs, while encouraging businesses to provide a safe work environment for employees.
If you’re a business owner with employees in Pennsylvania, you are required to carry workers’ compensation insurance. Coverage benefits any employee who is injured or acquires an illness on the job by providing a percentage of lost wages and financial assistance for medical expenses and ongoing treatment.
An employer that maintains a workplace safety committee that is certified by the state is eligible to receive a 5% discount on a workers’ compensation policy premium.
Pennsylvania law states that any employee who is injured on the job is eligible for workers’ compensation benefits, regardless of whether that person is performing full-time, part-time, or seasonal work.
If you’re self-employed, also called a sole proprietor, you don’t need workers’ compensation. Pennsylvania doesn’t mandate coverage, but it is available if you choose. Self-employed workers in high-risk industries can still receive lost-wage assistance and other benefits through a workers’ comp policy. It’s also possible that a company looking to hire you as a contractor might hesitate if you don’t carry your own coverage.
Employers can face civil and criminal penalties for failure to have adequate workers’ comp coverage. If an employee is injured on the job and the employer is uninsured, the employee’s benefits will be paid from the Uninsured Employers Guaranty Fund, and the employer will be responsible for reimbursing the fund. This would include costs, interest, penalties, and other fees.
In addition, the uninsured employer opens itself up to litigation for any injuries sustained if the employee decides to sue for damages. Often, the amount of damages awarded is more than what the employer’s cost would have been for workers’ compensation insurance.
If it is found that an employer failed to maintain workers’ compensation coverage, each individual responsible for that lapse could also be criminally charged. That person could be found guilty of a misdemeanor, which would carry a fine up to $2,500 and up to a year in jail. If the failure to comply is intentional, it could be a felony charge with a fine of up to $15,000 and up to seven years in prison.
Criminal counts, fines, penalties, and jail time can increase for each day the employer failed to maintain workers’ compensation insurance.
Estimated employer costs for workers’ compensation in Pennsylvania are $1.44 per $100 in covered payroll, according to the National Academy of Social Insurance [PDF].
There are four methods for how to buy workers’ compensation insurance in Pennsylvania:
Costs for workers’ compensation insurance vary because they depend on the level of risk involved for specific employees. Different jobs have different associated hazards, which are typically classified through class codes.
The state Department of Labor & Industry regulates workers’ compensation insurance in Pennsylvania. Exemption applications or other required documentation must be filed with the department.
The only circumstance in which a Pennsylvania employer would not be required to carry workers’ compensation insurance is if all of its employees fall into a category for someone who is exempt from workers’ compensation insurance in Pennsylvania:
There are nuances and specific conditions that apply with each category. Check with a licensed insurance agent to ensure that you’re following the laws correctly for your situation.
In addition to providing compensation for lost wages and medical treatments to an injured worker, the dependents of someone who dies on the job can obtain workers’ compensation death benefits. Pennsylvania qualifies the following people as dependents:
Workers’ compensation death benefits also include up to $3,000 for burial expenses.
Workers’ comp settlements in Pennsylvania provide an opportunity for all stakeholders to close a claim. Typically the injured employee gives up rights to future claims in exchange for a sum of money. Often, the payment is awarded as a lump sum, but some injured workers will obtain compensation benefits in the form of a structured settlement, which means that payments are made in installments over a period of time.
It’s possible for an injured worker to obtain a commutation, which is when a lump sum is awarded in lieu of weekly benefits but the worker does not give up rights to future benefits like medical treatment.
The statute of limitations to file a claim petition for an injury sustained on the job in Pennsylvania is three years from the date of injury. However, the employee is required to seek treatment with an approved provider within 90 days after the injury.
If you are ready to explore workers’ comp insurance options for your Pennsylvania business, start a free online application today to compare quotes from multiple carriers.