Being self-employed is a dream for some individuals. The freedom that comes with being your own boss is exhilarating. You’re in charge of making your work schedule. Want the day off? No problem, as long as you’re not leaving clients hanging. A potential downside of working for yourself is meeting Pennsylvania workers’ compensation requirements for self-employed individuals.
Chances are, you’re not exactly an expert on the Keystone State’s workers’ compensation laws. You’re probably even wondering if you’re legally required to carry insurance on yourself. Since Pennsylvania’s insurance laws can get a tad confusing, we’re looking at insurance regulations for self-employed workers.
Worker’s Compensation and Pennsylvania Law
Even if you only have one employee, you’re going to need to carry workers’ compensation insurance. There’s no getting around this legal rule, you must carry insurance on all employees. You’re also not going to run across any exceptions. Even if your sole employee is your spouse, you must carry workers’ comp insurance.
However, the law changes when you’re self-employed. This means you’re both the sole owner and the only employee. Yep, you’re wearing a few different hats and this can keep you busy. Don’t forget, as a self-employed individual you’re always the boss. This can make it a little easier when you’re doing the job of an employee and business owner.
Since no one is on your payroll, the Keystone State doesn’t require you to have workers’ compensation. Instead, the choice is left up to you. You can pay for a policy or rely on your personal health and auto insurance plans to cover any damages. Sometimes, this even works out if you’re involved in an accident.
Should Self-Employed Individuals Have Workers’ Compensation?
Did you know an estimated 78% of Americans struggle to stretch their paychecks until the next one? If this sounds like your financial situation, it’s nothing to be ashamed of.
You’re certainly not alone. You depend on landing clients and completing their projects on time to earn your pay. Just imagine what happens if an accident occurs and suddenly you’re missing work. On top of this, you’re probably also dealing with medical expenses and possibly property repair/replacement costs.
Just the thought of trying to climb out of this debt can be pretty overwhelming. Some independent contractors never fully recover financially after a devastating accident.
Okay, you’re probably panicking and convinced you can’t go a second longer without workers’ comp insurance. You may even be right but don’t sign any insurance forms just yet. Take a minute to think about any risks inherent in your work. For example, are you working around tools and machinery, or performing tons of manual labor? If the answer is yes, your risk of an accident is probably pretty high. Worker’s compensation can help ensure you’re financially covered if something goes wrong.
On the other hand, if you’re an independent contractor focused on crafting unique content, your risk of workplace injury is probably fairly low. Workers’ comp may not be necessary, especially if you have a robust health insurance plan.
Don’t forget about your budget. Workers’ compensation insurance isn’t free and costs can be rather high even if the policy only covers your damages. As we noted earlier, auto and health insurance policies often cover most or all of your damages sustained in accidents. Carefully review your existing policies to see what’s covered before making your mind up about workers’ compensation.
Independent Contractors Hiring Requirements
Typically, Pennsylvania law requires all employees to have workers’ compensation coverage. So, if an organization brings on an independent contractor does this mean they need to provide proof of insurance? In this instance, the answer is no, at least in the legal sense. Remember, self-employed individuals aren’t required to carry workers’ compensation insurance on themselves.
With that being said, Pennsylvania law doesn’t have anything to say about businesses requiring proof of insurance from independent contractors. This means a potential client can mandate your insurance requirements, at least for that job. You can be turned down as a potential freelance employee simply because you’re not carrying insurance beyond your personal coverage.
Employers often require all staff to have insurance whether they’re full-time or an independent contractor. This helps limit the business’s liability if you’re injured in a work-related accident.
What Does Workers’ Compensation Cover?
Before we dive into standard workers’ compensation coverage, there’s something to point out. Workers’ compensation doesn’t take the place of your health insurance. Workers’ compensation only covers injuries sustained on the job. So, if you come down with the flu on a day off, your health insurance picks up the tab for your diagnosis and treatment.
So, what does worker’s compensation cover? Essentially, the coverage is limited to two categories. Your medical expenses are pretty much always covered. This includes any long-term or lifetime claim. Yep, workers’ compensation can pay out for short and long-term disabilities.
Along with taking care of your medical costs, workers’ compensation can also cover your lost current and potentially future earnings. As a freelancer, knowing your average earnings can be covered after an accident can do wonders for your stress levels. You’re probably not going to be able to recover 100% of your lost earnings, but you should be able to claim a significant portion.
Getting Workers’ Compensation as a Self-Employed Individual
You don’t want to give up the great benefits that come with being your own boss. You love the freedom and flexibility but you’re worried about insurance. Trying to get workers’ compensation as an independent contractor isn’t exactly a piece of cake. You’re going to run into red tape, not to mention some ridiculously high insurance quotes.
Navigating your insurance options means doing a ton of research. You’re looking for an affordable policy that also gives you the coverage you need. Talk about trying to find a needle in a field of haystacks. You simply don’t have enough time in the day. If you’re struggling with questions about workers’ compensation, don’t hesitate to reach out to an experienced attorney.
From helping you navigate Pennsylvania law to filing a worker’s compensation claim, your attorney can walk you through the steps.
