Do businesses need workers compensation insurance before hiring?

Workers Compensation Insurance Requirements Before Hiring in Pennsylvania

In Pennsylvania, businesses generally must secure workers compensation insurance before hiring employees. This insurance covers medical expenses and lost wages for employees who suffer work-related injuries or illnesses.

Key operational points for Pennsylvania employers:

• Mandatory coverage: Most businesses with one or more employees are required to have workers compensation insurance before starting employment.
• Exemptions: Certain small businesses and specific employee categories may be exempt, but these are limited. Verify if your business qualifies for any exemption.
• Insurance procurement: Purchase coverage through private insurance carriers or the Pennsylvania Assigned Risk Plan if you cannot obtain insurance on the open market.
• Compliance: Maintain proof of insurance on file and display the required workers compensation notices at the workplace.
• Penalties: Operating without required coverage can result in fines, stop-work orders, and liability for injury costs.

As of 2026, securing workers compensation insurance before hiring is a critical compliance step in Pennsylvania. This process integrates with payroll setup, employee classification, and ongoing recordkeeping to ensure smooth operations and legal adherence.