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Does your Pennsylvania Business Need Workers' Compensation Insurance?


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If you have employees, including seasonal or part-time employees, then yes, your business must have workers' compensation insurance. The PA Workers' Compensation Law requires all employers with any employees to carry workers' compensation insurance before an employee's first day of work. Workers' compensation insurance is partially designed to protect the employer by helping to dissuade employees from suing employers for the tort of negligence resulting in on-the-job injuries. In exchange, for qualified injuries sustained on-the-job, employees are guaranteed coverage for medical costs and sometimes partial replacement of lost wages.

here are stiff civil and criminal penalties for failing to obtain workers' compensation insurance. On the criminal side, employers can be fined as much as $2,500 and/or face one year in prison for every day of missing coverage. Also, the employer may be required to pay restitution in the amount of any workers' compensation award for injured workers. Usually the offense is a misdemeanor, but it may constitute a felony if the violation was intentional. On the civil side, employers normally are immune from personal injury claims by employees by having workers' compensation insurance, but do subject themselves to liability when lacking workers' compensation insurance.

Only businesses with employees are required to carry workers' compensation insurance. It should be noted that independent contractors are not considered employees. Therefore, if you exclusively subcontract work to independent contractors in your business, you would not be legally required to obtain workers' compensation insurance. However, independent contractor rules are specific and need to be carefully considered. Treating an employee like an independent contractor can have tax implications and result in penalties and fines. Federal and State level independent contractor rules vary, and in addition, the rules may differ in how they apply based on the nature of the situation (workers' compensation issues vs. unemployment compensation issues, for example). We are available for assistance with interpreting independent contractor rules.

BASICS


The Workers Compensation Act in Pennsylvania is enforced by the PA Department of Labor and Industry, Bureau of Workers' Compensation (Bureau), and covers all employees' injuries "arising in the course and scope of employment," which includes injuries sustained on the employer's premises, as well as injuries incurred while engaged in the furtherance of the employer's business off the premises.

If an employee is injured while working or suffers a work-related illness, workers' compensation benefits cover the reasonable and necessary medical expenses. If the employee is unable to return to work for seven days, the benefits will also cover wage-loss compensation benefits until the employee can return to work. Wage-loss benefit payments will continue as long as the worker is totally disabled due to a work related injury, up to a maximum of 500 weeks of benefit payments. Also, death benefits can be paid to dependent survivors of workers whose deaths are work-related and occur within 300 weeks from the date of injury.

Employers must choose their type of insurance coverage. Benefits may be paid by private insurance companies, third party administrators, the State Workers' Insurance Fund, which is a state-run workers' compensation insurance carrier, or the employers themselves if they self-insure. Your insurance agent that handles your business insurance can most likely help with obtaining a workers' compensation insurance policy. Alternatively, we have worked with a some very good agents that we can refer you to for assistance in procuring a policy.

Employers must post form LIBC-500, "Remember: It Is Important to Tell Your Employer About Your Injury", to inform employees of the name, address, and phone number of their workers' compensation insurance company, their third-party administrator, or other party handling workers' compensation claims. For more information on postings required for most employers, see our article entitled Basic Minimum Workplace Poster Requirements for Pennsylvania Employers.

TYPES OF CLAIMS COVERED


Workers' compensation benefits cover employees who are injured during the course and scope of their employment and which are related to the employment. The most common injury is a one-time accident at the workplace, but an injury could also result from a series of small events that all together result in a serious condition such as carpal tunnel syndrome. Issues may arise over whether an employee was injured as a result of employment. Sometimes employees are injured away from or outside of the workplace, such as in the parking lot, but are still eligible for workers' compensation benefits. Additionally, for example, employees injured playing a sport that is sponsored by the company (i.e. the company softball team) will qualify for workers' compensation coverage. Further, certain employees may travel away from the workplace or work from home, but their injuries can still occur within the course of their employment. Sometimes injuries occur at work but might not be covered by workers' compensation benefits. For instance, an injury may result from the intentional actions of a third party, and not from the employment itself - such as if two workers engage in a physical altercation with each other.

Certain stress, mental, and physiological conditions caused by the work environment, which were not caused by a physical injury, may or may not be covered as compensable injuries. Benefits are not usually available for self-inflicted injuries, injuries resulting from crimes or third parties, injuries resulting from illegal use of drugs or clear violations of workplace policy, and pre-existing conditions. Although, employees with pre-existing conditions may still be eligible for workers' compensation benefits if their conditions are worsened or aggravated by working conditions.

HEALTH CARE PROVIDER VISITS


Employers and/or their insurers should designate a list of six approved health care providers in the immediate area, at least three of whom are physicians, with phone numbers and addresses, and properly post the list in an area accessible to all employees. If the employer properly posts this list, then any injured workers must be treated by a health care provider from the list for the first 90 days following the first treatment of the injury. If the worker fails to go to an approved health care provider from the list, the employer or insurance company may avoid making benefits payments during that 90-day period. If the employer fails to post a list of health care providers, the worker may go to any health care provider and the employer or insurance company will still be required to make the benefit payments. Employers cannot interfere with or direct the course of treatment for the worker as long as the treatment is reasonable, necessary, and causally related to the work injury. The health care provider must submit periodic reports along with all billing information on forms prescribed by the Workers' Compensation Bureau. The employer or insurance company is required to pay for or to contest the medical treatment within thirty (30) days after the required forms have been submitted to insurance company. If the employer and insurance company fail to contest the treatment in this 30-day period, they waive the right to do so and must make the payment. If the employer or insurance company then fails to make timely payment for the medical treatment, then penalties may be assessed.

Employers and insurance companies should consult legal counsel before contesting whether or not medical treatment is related to the work injury. If they contest it unsuccessfully, they may be assessed monetary penalties. If the medical treatment appears on its face to be related to the work injury, as determined by the Bureau, the employer and insurance company will have to prove that it wasn't related to the work injury. If it does not appear on its face to be related to the work injury, the employer and insurance company can refuse to pay until the Bureau rules on the matter, and the employee must prove that the medical treatment was related to the work injury. Any employer or insurance company that challenges the causation of medical bills may be subject to monetary penalties for refusing to pay medical bills if the Bureau rules that the treatment was related to the work injury.

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These guides provide general information only and are not intended as legal advice, nor do they create an attorney-client relationship. The facts in your particular situation may render a different result. Therefore, for more information on this general topic, please contact the us via the navigation menu at the top.