PA Executive Officer Exemption Under Workers’ Compensation

David C. King

Author – David C. King, President & CEO, Horst Insurance

Horst Insurance regularly assists clients in designing insurance verification procedures for businesses hiring service providers and subcontractors. It is important that all businesses verify that those you hire to perform services for you purchase the appropriate types and amounts of coverage before doing the work. This helps to ensure that coverage is available should they cause property damage or bodily injury that results in a claim against you, and to ensure that they are meeting the requirement to provide workers’ compensation coverage to all employees. At one point or another, you will engage a service provider that says “we are a corporation, but we have no employees and therefore we don’t purchase workers’ compensation insurance”. All “corporations” in PA have a workers’ compensation exposure and coverage requirement. The only corporations that would qualify as exempt are corporations whose only employees are the executive officers of those companies, and those executive officers have chosen to exempt themselves from coverage. However, just saying “I choose to exempt myself” doesn’t meet the requirements for relief from the mandate to purchase coverage. Those executive officers must apply to the PA Department of Labor and Industry for an “Executive Officer Exemption” and receive an approval letter. The application for exemption is PALIBC 509. It is widely available on the internet. Once approved, the Department of Labor issues an approval letter which is the only proof of an approved exemption. Absent the approval letter, a PA corporation is in violation of the law if they do not purchase workers’ compensation coverage. Even worse, your business, as the party that hires such an uninsured provider or subcontractor, can be held responsible for injuries that occur to those executive officers while working on your premises. Below is a sample PA Department of Labor approval letter. This letter should be provided to you just like a certificate of insurance. Once you have verification that an exemption has been issued to a particular business you plan on hiring, you will be considered to have met your obligation to ensure that your service provider or subcontractor has met the requirements of the PA Workers’ Compensation Act.

Sample PA Department of Labor Approval Letter