Executives Can Decline PA Workers’ Comp Coverage
Generally, the coverage of employees for Pennsylvania workers’ compensation benefits is mandatory. There are narrow exceptions to this rule, as there are exceptions to most rules. One of those exceptions deals with Section 104 of the Pennsylvania Workers’ Compensation Act (WCA), wherein an executive officer of a corporation, who holds an ownership interest in the corporation, may be able to elect NOT to be an “employee” under the WCA.
To make sure this election is intentional, certain forms must be completed and signed by the executive at issue to accomplish the exclusion from workers’ comp coverage. But what happens if the executive did not actually mean to be excluded from coverage?
The Commonwealth Court of Pennsylvania faced such an issue in Anthony Wagner v. Workers’ Compensation Appeal Board (Anthony Wagner Auto Repairs & Sales, Inc.). Here, the injured worker was an owner and executive officer of a corporation. In setting up the corporation and insurance, the injured worker simply signed all of the papers he was given without really reading them (yet another example of the insanity of doing such a thing). The injured worker did not mean to exclude himself from workers’ compensation coverage.
When he was injured, the executive filed a Claim Petition for workers’ comp benefits. The case was “bifurcated” on the issue of whether he was excluded from workers’ comp coverage (“bifurcation” is done when a case has a threshold issue the parties want resolved before litigating the entire case). The Claim Petition was denied by the Workers’ Compensation Judge (WCJ), who found that the injured worker had elected to exclude himself from workers’ compensation coverage. This was affirmed by the Workers’ Compensation Appeal Board.
Upon further appeal, the Commonwealth Court of PA also affirmed the denial of the Claim Petition. In the proceedings before the WCJ, the injured worker was found not credible. The WCJ found that the injured worker intentionally and knowingly requested in writing to be excluded from workers’ compensation coverage. It was mentioned, in essence, that one is bound by what they sign. The Commonwealth Court simply observed that the WCJ found that the injured worker intentionally and knowingly signed the forms required by the WCA to be excluded from coverage for workers’ comp benefits in PA, so the injured worker was properly excluded from coverage.
Aside from the obvious lesson, to always read a document like this (and perhaps get the opinion of an experienced PA workers’ compensation attorney), there is also a lesson for those executives who truly do wish to be excluded from workers’ comp coverage. It is important to make arrangements for alternative coverage, perhaps with some type of private disability policy. Electing to exclude yourself from PA workers’ comp coverage can have a dramatic and tragic impact on the injured worker and his or her family.