Glossary · PA Workers' Comp

Corporate Officer Exemption

The option for Pennsylvania corporate officers who own at least 5% of corporate stock to exempt themselves from workers' comp coverage.

Definition

Pennsylvania law allows corporate officers who own at least 5% of the corporation's stock to elect to exempt themselves from workers' compensation coverage. This exemption is voluntary and requires proper election — it does not happen automatically.

PA Corporate Officer Exemption: How to Elect It and the Trade-Offs Involved

To elect the officer exemption, the officer must own at least 5% of the stock and file the proper election paperwork. The exemption must be renewed annually with the workers' comp carrier.

Exempted officers are not covered by workers' comp if they are injured at work. This is a significant exposure — especially for business owners who work in the field alongside employees. The trade-off is lower payroll in the workers' comp audit.

Officers who are exempted from their own coverage are still required to cover their employees. The exemption only applies to the officer's own payroll, not to the coverage requirement for other workers.

In Pennsylvania, LLC members may elect a similar exemption. Partners in a partnership are also generally eligible for exemption.