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

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In Pennsylvania, any business that employs one or more people is required by law to provide them with workers’ compensation insurance. This provides no-fault coverage for any work-related injuries or illnesses that may occur, including medical treatment and a portion of the injured worker’s lost wages.

But what does the law say about workers' compensation for the self-employed?

If you are self-employed, or a “sole proprietor,” the commonwealth does not require any company to provide you with insurance, nor does it require you to get it for yourself.

A self-employed person can still get workers’ compensation insurance, but it may or may not be worth pursuing. Understanding how it works and possible avenues for recovering damages after a work-related injury can help you make an informed decision about whether self-employed workers’ comp is right for you.

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 self-employed 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.

If your job involves manual labor and heavy machinery or tools, you are at a higher risk of injury—even if you take care to do your job safely and properly. Another’s actions or a piece of faulty equipment could cause you significant harm, leaving you unable to work and earn a living for yourself and your family. If you have a workers’ compensation policy, you could still receive lost-wage assistance and other benefits as a self-employed worker—without having to prove that someone else was to blame.

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 a company in Pennsylvania to hire contractors without 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 policy to collect benefits.

According to the Pennsylvania Office of Unemployment, workers are considered employees unless proven otherwise.

To be considered an independent contractor, a worker must meet these qualifications:

  • They are free from control or direction over the services they perform.
  • They are engaged in an independently established occupation, trade, business, or profession.

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 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. The proper classification of employees versus independent contractors is essential for employers and workers alike, not only in terms of workers’ compensation, but also related to taxes, overtime pay, and more.

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.

Implications of Workers’ Comp Coverage for the Self-Employed

If you are self-employed, you are not automatically eligible for workers’ compensation benefits. You must make the decision for yourself as to whether you want to purchase workers’ comp coverage. Cost is a factor, of course, as well as need. Do you work in a field where you are exposed to hazardous conditions or substances? If your job involves manual labor, a lot of time on the road, or any type of heavy machinery or equipment, you may want to consider getting coverage.

At Handler, Henning & Rosenberg LLC, we are committed to helping all workers in Pennsylvania, including those who are self-employed, independent contractors, and employees. We recognize the difficulties that any type of worker may face if they are injured on the job, and we know how to pursue fair compensation so they can begin to rebuild and move on with their lives. That includes workers’ compensation claims as well as personal injury lawsuits, if a third party was involved. We’ve been fighting for injured workers for the past 100 years. We’re ready to see how we can help you.

For help with your workers' compensation case, contact HHR. Our firm has an attorney on staff who specializes in Pennsylvania workers' compensation law. Don’t wait to give us a call, and we will answer your questions for free: (888) 498-3023.

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