Contractor Workers' Comp in Pennsylvania
Pennsylvania workers' comp for contractors — required the moment you have employees, and priced by class code.
Pennsylvania law requires workers' compensation insurance for virtually every employer with employees — there is no small-employer exemption like some states have. For a contractor, comp covers medical bills and lost wages when an employee is hurt on the job, and it shields you from being sued directly for that injury. It sits beside contractor general liability as the second must-have policy.
Comp is priced by class code and payroll. Each trade has a workers' comp classification with its own rate per $100 of payroll — roofing and framing carry high rates because the injury risk is high; finish work and estimating carry low ones. Getting your employees into the correct codes is where money is won or lost: misclassified payroll either overcharges you or triggers a nasty audit bill. We make sure the codes match the actual work.
Two Pennsylvania rules drive most comp surprises for contractors. First, under the Construction Workplace Misclassification Act (Act 72 of 2010), a construction worker is your employee for comp unless the worker has a written contract, works free of your control, and runs an independent business that, among other things, carries at least $50,000 of liability insurance. Second, under section 302 of the Workers' Compensation Act, a contractor that subcontracts work is liable for comp to the sub's employees when the sub has not secured its own coverage. That is how uninsured subs end up on your audit. We set the policy up to track sub certificates so you are not paying comp on crews that should carry their own.
Comp is usually best shopped on its own with a comp specialist rather than bundled, so you get the right code rates. Start a Pennsylvania contractor quote with your trades and payroll, and we will place the comp correctly.
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Frequently asked questions
Can I exclude myself as an owner or officer?
It depends on how the business is set up. Sole proprietors and general partners are not required to cover themselves. An executive officer of a for-profit corporation can elect out with any ownership interest in an S corporation or at least 5 percent of a C corporation; nonprofit officers can if they serve without pay. The election is made on form LIBC-509 with an LIBC-513 declaration, filed with your insurer, or with the Bureau of Workers' Compensation if you have no policy for other employees.
What happens at the year-end comp audit?
The carrier compares the payroll you estimated with your actual payroll by class code, and asks for certificates for every sub you paid. Payroll paid to a sub with no comp certificate is usually added to your premium. Have payroll reports by class, 1099 totals and sub certificates ready, and raise any classification you disagree with at the audit.
What does it cost to go without comp in Pennsylvania?
More than the premium. The Department of Labor & Industry warns that an employer without required coverage can be criminally prosecuted, with fines and possible imprisonment for each day of noncompliance.
What do you need to quote contractor comp?
Your FEIN, payroll by trade or task for each employee, owner and officer details and whether any will be excluded, the share of work you subcontract, and loss runs if you have carried comp before. An estimated payroll close to the real number keeps the audit from becoming a surprise.