Can Independent Contractors Receive Coverage under PA Workers’ Comp Law? (2024)

  • Owner
  • 01/25/2023

Independent contractors are not eligible for workers’ compensation under the Pennsylvania Workers’ Compensation Act. However, just because your employer may characterize you as an independent contractor, that does not mean you are an independent contractor instead of an employee under workers’ compensation law. If you believe that you’ve been misclassified as an independent contractor, please contact the workers’ compensation lawyers at Pearson Koutcher Law.

What is an Independent Contractor?

An independent contractor is someone who is not an employee but accepts a 77, verbal or in writing, to do work for another company. According to the Pennsylvania Workers’ Compensation Act and precedent set by judicial decisions, independent contractors normally set their own work schedules, get paid by the job as opposed to an hourly wage or salary, and use their own equipment. Furthermore, they typically have the discretion to turn down jobs. It is not necessarily determinative of your status if the hiring documents classify you as an “independent contractor.” Some employers require their workers to sign a document that indicates they are an independent contract in an attempt to avoid liability if a workers’ compensation claim is ever filed against them. If your employer is trying to deny you workers’ compensation benefits on the grounds that you are an independent contractor and not an employee, contact Pearson Koutcher Law today to see if you have been misclassified.

Factors in Support of you Being Classified as an Employee, not an Independent Contractor

When a Workers’ Compensation Judge is deciding whether or not you are an employee, and thus eligible for workers’ compensation benefits, first and foremost, they are looking for the degree of control that your employer maintains over the work you perform. The more control that your employer exercises over your work and the more supervision that they provide, the more compelling an argument you have that you are an in an employee-employer relationship. Here are some other factors that the Judge will consider in determining whether you are an employee or independent contractor:

  • Are you paid by time – the hour or the week? Being paid by time usually means that you are an employee, not a contractor who is normally paid by the job.
  • Do you use your employer’s machinery and tools? Independent contractors normally provide their own machinery and tools to do the job.
  • Are you allowed to turn work down? Independent contractors can select the jobs they choose to do. An employee cannot decline work.
  • Is the work that you are doing part of the normal business of the employer? If yes, you are more likely to be considered an employee.
  • Are taxes taken out of your paychecks? The withholding of taxes is consistent with an employee-employer relationship while a company’s failure to withhold taxes and issuance of a 1099 is consistent with independent contractor status.

Hurt At Work? Call The PA Workers’ Comp Lawyers At Pearson Koutcher Law

If you have been injured at work and denied benefits on the basis that you have been mischaracterized as an independent contractor – or for any other reason — contact our team of workers’ compensation lawyers at Pearson Koutcher Law to discuss your case. Our lawyers have decades of experience standing up to insurance companies to ensure that injured workers receive the benefits they deserve. If you need assistance with your workers’ comp. case, please contact Pearson Koutcher Law for a free consultation today!

Can Independent Contractors Receive Coverage under PA Workers’ Comp Law? (2024)

FAQs

Can Independent Contractors Receive Coverage under PA Workers’ Comp Law? ›

Generally, no. Pennsylvania workers' compensation laws only apply to employees, providing benefits for work-related injuries or illnesses. Viewed as sole proprietors and not employees, independent contractors usually do not receive workers' compensation insurance coverage.

Are 1099 employees covered by workers' comp in PA? ›

In Pennsylvania, any self-employed workers or sole proprietors are legally exempt from the requirement of purchasing workers' compensation. Though, depending on the industry you're working in and the nature of your job, it could be advantageous to pursue.

Who is exempt from workers' compensation insurance in PA? ›

Exemptions include: people covered under other workers' compensation acts, such as railroad workers, longshoremen and federal employees; domestic servants (coverage is optional); agricultural workers who work fewer than 30 days or earn less than $1,200 in a calendar year from one employer; and employees who have ...

Does a sole proprietor need workers' compensation in Pennsylvania? ›

When you are hired to complete a job, the person hiring you will likely have great interest in your insurance situation. As a sole proprietor in Pennsylvania, you are not required to carry workers' compensation insurance.

What is the difference between an independent contractor and an employee in PA? ›

An independent contractor can make a profit or a loss, but an employee must be paid their wages in all circ*mstances. The Type of Relationship between the Parties is illustrated by: Written contracts describing the relationship the parties intended to create.

Is 1099 considered compensation? ›

If payment for services you provided is listed on Form 1099-NEC, Nonemployee Compensation, the payer is treating you as a self-employed worker, also referred to as an independent contractor. You don't necessarily have to have a business for payments for your services to be reported on Form 1099-NEC.

What does workers comp cover in PA? ›

Pennsylvania workers' compensation insurance covers: Injuries that result from an employee's work at your business. Illnesses from exposure to chemicals or allergens on the job. Repetitive stress injuries, like carpal tunnel syndrome.

Can owners be excluded from workers' compensation in PA? ›

Partners and owners in a Limited Liability Company aren't automatically included in workers' comp policies. If a partner wants workers' comp coverage, they need to indicate this at signup time or send a written request to their insurance company.

Is non employee compensation taxable in PA? ›

A Pennsylvania resident is taxed on all compensation received regardless of the source.

Is PA workers compensation taxable? ›

The most important thing to remember is that you do not have to pay income taxes on any benefits that are paid out under workers' compensation in Pennsylvania. If a tax preparer or advisor asks you about it, it is perfectly acceptable to tell him or her that these benefits are not taxed.

Is an independent contractor not an employee? ›

California Law states that a worker may be considered an independent contractor if (1) the worker has the right to control the performance of services, (2) the result of the work is the primary factor bargained for, and not the means by which it is accomplished, (3) the worker has an independently established business, ...

Can a 1099 employee collect unemployment in PA? ›

Normally, self-employed and 1099 earners — such as sole independent contractors, freelancers, gig workers and sole proprietors — do not qualify for unemployment benefits.

Why use independent contractors instead of employees? ›

By engaging independent contractors, employers enjoy many benefits, such as low commitment beyond the contract terms, quick onboarding, and no additional costs, such as payroll tax, statutory contributions, and supplemental benefits.

Does OSHA cover 1099 employees? ›

Answer: No. If a construction worker is truly self-employed — is not an employee — and has no employees working for him or her, OSHA has no authority to require that individual to abide by OSHA construction requirements.

Can a 1099 employee claim expenses? ›

Contractors and other self-employed workers can deduct home office expenses, advertising expenses, accounting fees, phone bills, equipment depreciation, travel and car expenses, healthcare and retirement contributions, and more from their taxable income.

Is workers comp taxable income in PA? ›

Workers' compensation benefits are generally tax-free under Pennsylvania law. They are not taxed like regular income.

Does an independent contractor need a business license in PA? ›

All contractors, including self-employed contractors and sole proprietorships, subcontractors and independent contractors, and corporations, partnerships and all other types of business entities must be registered, unless they fall into the two exemptions above.

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