Workers' Compensation Coverage Expanded to Sole Proprietors and Other Business Persons
Act 20 of 2011 allows insurance companies in Pennsylvania, including the State Workers' Insurance Fund ("SWIF"), to issue coverage to sole proprietors, partners in a partnership, and members of limited liability companies on a purely voluntary basis. Previously, such coverage was not available to such persons.
Payroll for workers' compensation purposes is assumed to be at least equal to the minimum payroll for a corporate officer, and no more than the maximum payroll for a corporate officer as established by the Insurance Department. This is important because workers' compensation premiums are based on an established rate multiplied by each $100 unit of payroll.
The law repeals a provision that provided coverage only to sole proprietors and partners engaged in logging activities.
The new law also transfers $4 million from the administrative fund to the Uninsured Employers' Guarantee Fund for this fiscal year August 31, 2011, which is important to the operation of the workers' compensation system.
"Sole proprietors and other small businesses need access to the peace of mind afforded by workers' compensation coverage," said Department of Labor & Industry Secretary Julia K. Hearthway. "This legislation makes that protection possible, ensuring that more Pennsylvanians injured on the job can make ends meet while they recover."
This new law is viewed as particularly helpful for start-up business which have not chosen a corporate form. Corporate officers have had the ability to elect in or out of the workers' compensation system in Pennsylvania for some time.
Act 20 [HB 440, PN 2084] was signed by the Governor on June 30, 2011, and the new coverage becomes available on August 29, 2011.
Skarlatos & Zonarich LLP is a full-service law firm with highly skilled professionals dedicated to providing clients with sound advice and aggressive advocacy. For more information, visit skarlatoszonarich.com.
