Workers' comp laws in Pennsylvania
Pennsylvania requires workers' comp from your first employee, and the Department of Labor & Industry enforces it. What marks the state out is that corporate officers are covered unless they opt out on two forms. The other seven states are on the index of state pages.
- Coverage is required from the first employee, with no payroll or headcount threshold.
- Officers are covered by default; opting out takes two forms filed with the insurer.
- Tips are counted in their own way: the top-up to the federal minimum counts, tips above it do not, automatic gratuities do.
Do I have to carry workers' comp in Pennsylvania?
Yes, from your first employee. Pennsylvania has no payroll or headcount threshold, and part-timers and family members count. (Source: Pennsylvania Department of Labor & Industry)
Insurance that pays an employee's medical bills and lost wages after a work injury is called workers' compensationWorkers' Compensation Insurance that pays medical bills and lost wages when an employee is hurt or sick because of work. Insurers call it workers' compensation. more →, or workers' comp; the policy itself is on our workers' comp coverage page. Every employer must insure with a private insurer or the State Workers' Insurance Fund, unless the Department of Labor & Industry (L&I) allows self-insurance. (Source: Workers' Compensation Act §305)
L&I's free Workers' Compensation Insurance Search shows whether a business is covered today, and you must post your insurer's name and phone number at each work site. (Source: Act §305(e))
A food manufacturer with a farm arm has a second trigger: once it pays a farm worker $1,200 in a year or employs one for 30 days, every employee must be covered. (Source: Act §302(c))
Who counts as my employee in Pennsylvania?
Anyone who works for you for pay, unless you can prove otherwise. For a contractor, you must show the person is free from your control and runs an independent business. (Source: L&I, Employee or Independent Contractor)
L&I looks at who sets hours, supplies tools and withholds taxes, not at the label. (Source: L&I, employer information page) See the guide to hiring your first employee.
Hirers answer for subcontractors' staff. If you subcontract work that is a regular part of your business, you are treated as the employer of the subcontractor's staff unless the subcontractor is insured. (Source: Act §302) A wholesaler, distributor or importer that hires outside haulers can land here when a driver is hurt. A commercial property owner owes compensation to a contractor's laborer doing part of its regular business unless the contractor is insured.
Corporate officers are covered by default. An officer can opt out only as an S corporation owner, or as a C corporation owner holding at least 5%. The forms are the Application for Executive Officer Exception (LIBC-509) and the Executive Officer's Declaration/Affidavit (LIBC-513), filed before the policy starts. (Source: Pennsylvania Compensation Rating Bureau, officer rules)
What goes in payroll?
Wages, bonuses, commissions and full overtime. Tips are the exception: only the top-up to the federal minimum wage counts. (Source: Pennsylvania Compensation Rating Bureau, premium rules)
The Pennsylvania Compensation Rating Bureau (PCRB) writes the state's rating manual. It also counts automatic gratuities you add to a bill, because a tip is a tip only if the customer decides. (Source: PCRB manual, 2025) Take a server at a restaurant.
| What happens | Amount |
|---|---|
| The server's cash wage for the year is | $3,000 |
| You top the pay up to the federal minimum wage, which adds | $4,000 |
| Customers leave tips above that, which add | $0 |
| You add an automatic gratuity to large-party bills, which adds | $2,000 |
| So the server's payroll for your policy is ($3,000 + $4,000 + $0 + $2,000) | $9,000 |
Illustration only, with round numbers. It is not a statement of what any policy charges; your own policy wording governs.
An officer's pay counts at no less than $1,347 and no more than $5,400 a week from April 1, 2026, and a part week counts as full. (Source: PCRB Quick Reference) After the year ends, the insurer checks real payroll in a review called a premium audit; see the guide to the yearly payroll check.
Who sets the rate in Pennsylvania?
The PCRB files base rates, called loss costs, and the Insurance Commissioner approves them. Loss costs fell 1.22% on April 1, 2026. (Source: Pennsylvania Insurance Department)
The PCRB sorts jobs into its own three-digit class codes, not the national four-digit ones. A hotel goes under 973 and its food and beverage staff under 945, which works only alongside 973. A grocery store's class 917 includes the deli, bakery and same-site pharmacy, until meat passes 50% of sales. A restaurant depot with aisles, baskets and checkout lanes is rated as a retail store, not a wholesaler. An online seller with over half its receipts from the internet is rated as a wholesale store for the goods it handles; remote office staff are class 822 only if they work from home over half the time. (Source: PCRB manual, 2022)
Your claims record moves the price through the experience modification factorExperience Modification Factor (E-Mod) A number, with 1.0 as average, that raises or lowers your workers' compensation price based on your claims compared with similar businesses. Insurers call it the experience modification factor. more →, once your audited premium reaches $5,000 over three years. (Source: PCRB Quick Reference)
The State Workers' Insurance Fund, run inside L&I, competes with private insurers and wrote 2.9% of premium in 2023. (Source: PCRB State Activity Report)
What about workers in other states?
Benefits follow where the job is based. A worker hurt out of state is covered if you have a place of business here and the worker regularly works at or from it. (Source: Act §305.2)
A commercial fleet whose drivers cross state lines can agree with each driver in writing which state the job is based in. Pennsylvania honors that unless the other state refuses. Benefits paid by another state do not block a Pennsylvania claim filed within three years. (Source: Act §305.2(b), (d))
For the rest of your insurance, see the guide to a new location in a new state.
What happens if I don't carry it?
A court can fine you and jail you, a hurt worker can sue you, and L&I can shut the business down. Each day without coverage is a separate offense. (Source: Act §305(b))
L&I lists the penalty as a fine up to $2,500 and up to one year for each day, rising to $15,000 and seven years when the failure is found intentional. The worker may sue and recover more than workers' comp pays. (Source: L&I, employer information page)
A stop-work order can bind a successor business with the same owner or officer in the same trade. A request to certify your coverage must be answered inside 15 days, or $200 a day builds for up to 30 days. (Source: Act §1610)
Frequently asked questions about workers' comp in Pennsylvania
Yes, if there are no other employees. You can be added to a policy by name if you choose.
Not if a licensed salesperson or insurance agent is paid only on commission as an independent contractor. The Act exempts them.
The Compliance Section of the Bureau of Workers' Compensation, at 717-787-3567.
Not sure which Pennsylvania rule you fall under?
Tell us who works for you and how they are paid, and we will help you work out which of these rules apply and what to ask the state.