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Do members of limited liability companies (LLC) have an obligation to ensure workers’ compensation liability on their members?

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Do members of limited liability companies (LLC) have an obligation to ensure workers’ compensation liability on their members?

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A. Section 301(a) of the Workers’ Compensation Act (Act), 77 P.S. Section 431, only requires employers to maintain workers’ compensation coverage of their employees. Section 104 of the Act, 77 P.S. Section 22, states that the “employee” as used in the Act is synonymous with servant and includes “[a]ll natural persons who perform services for another for a valuable consideration, exclusive of persons whose employment is casual in character and not in the regular course of the business of the employer…” To the extent that LLCs have no employees, i.e., its only workers are partners, it has no employees and, thus, no workers’ compensation liability. However, should a partner withdraw from the partnership and become an employee or the business adds a part-time or a full-time employee, it would then be required to insure its workers’ compensation liability.

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