Do I Need Workers' Compensation if I'm Self-Employed?


In Pennsylvania, any employer who employs one or more people is required by state law to provide them with workers’ compensation insurance. But what does the law say about workers' compensation for the self-employed? If you are self-employed, or a “sole proprietor,” the state does not require any company to provide you with insurance, nor does it require you to get it for yourself. However, a self-employed person can get workers’ compensation insurance, but it may or may not be worth pursuing.

Should You Have Workers’ Compensation Insurance with No Employees?

The answer to this question is dependent on a person’s situation and what they do for a living. Having workers' compensation may be advantageous if you’re an independent contractor in a high-risk industry like construction.

Workers’ compensation provides crucial payments during times a person can’t work because of an injury. According to Forbes, 78 percent of all Americans live paycheck to paycheck. Workers’ compensation is an important financial safety net for anyone who works, especially when they are completely reliant on themselves to generate an income.

Do Independent Contractors Need Workers’ Compensation Before Being Hired?

Some companies may be reluctant to hire you if you don’t have insurance, as it may become quite expensive for them if you get injured on the job without it. While it isn’t illegal for them to hire contractors without the coverage, they often require workers’ compensation to protect themselves from liability. This also protects a company from having a contractor sustain an injury while working and then attempt to use their workers’ compensation.

According to the Pennsylvania Office of Unemployment, and independent contractor must meet these qualifications:

  • The individual is free from control or direction for the services they perform
  • The individual is engaged in an independently established trade, occupation, profession, or business

If the contractor is being hired to perform services in the construction industry, a written contract must also exist to distinguish them from other workers.

Is Workers’ Compensation Required for Hiring Contractors?

No, workers’ compensation is not required for if you hire contractors. However, keep in mind that you still have the potential to be held liable for any work-related accidents. Requiring a contractor to have their own workers’ compensation is a great way to limit liability for accidents. However, this contractor must meet the qualifications listed above for workers’ compensation exemption.

How Can I Get Worker’s Compensation Insurance as a Self-Employed Worker?

Unfortunately, purchasing workers’ compensation insurance as a self-employed person can be challenging and expensive. You may have to spend a good deal of time researching your options. Most large insurance companies will not sell workers’ compensation insurance to a self-employed individual, as they do not view it as a worthwhile investment. Your best option would be to inquire with privately-owned insurance companies or pursue assistance from the State Worker’s Insurance Fund (SWIF).

SWIF was created to help Pennsylvania companies and workers afford insurance. If you are a sole proprietor who performs work for a particular company, you may submit SWIF’s application for “Voluntary Election of Coverage” to become eligible for workers’ compensation. However, by submitting this form you are agreeing to become a legal employee of that company for the purpose of receiving the coverage. If this does not align with your needs or goals, you should pursue the former option of finding an insurance company that will sell you workers’ compensation insurance at a rate you can afford.

For help with your workers' compensation case, call Handler, Henning & Rosenberg LLC. Our firm has an attorney on staff who specializes in Pennsylvania workers' compensation law. We're ready to take your call and answer your questions for free at (888) 498-3023.

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