Setting Up as a Pennsylvania Employer: The First-Hire Checklist

Before you start

Pennsylvania asks new employers to do a handful of things before or right after the first paycheck. None of them is hard on its own. The trouble is that they live with three different agencies, plus your local tax collector, plus the City of Philadelphia if you have anyone there.

This article puts them in order. Work top to bottom and you will have every account and every document you need. Get your federal Employer Identification Number, or EIN, from the IRS first, because every state registration below asks for it.

Step 1: Register for withholding and unemployment through myPATH

Pennsylvania has two employer tax accounts you need before the first paycheck. The first is an employer withholding account with the Department of Revenue, which is how you send in the state income tax you take out of each paycheck. The second is an unemployment compensation account with the Department of Labor and Industry, often shortened to L&I, which is how you pay into the state unemployment fund.

You open both at once. The PA Business One-Stop Shop explains that a single online business tax registration through myPATH covers both the Revenue withholding account and the L&I unemployment account. myPATH is the Department of Revenue’s online tax portal. You create a login, fill out one registration, and both agencies set up your accounts.

In 2022, myPATH’s online registration replaced the old PA-100 registration. If you find instructions telling you to file a PA-100, they are out of date.

L&I says missing the unemployment registration deadline can cost you. The department reports that failure to register risks a 3 percent increase in your contribution rate and fines of up to $10,000. Since the registration is free and takes minutes, there is no reason to wait.

Have your EIN, legal business name and address, ownership type, first Pennsylvania payroll date, and bank information ready before you log in.

Step 2: Get workers’ compensation coverage

Workers’ compensation is insurance that pays medical bills and lost wages when an employee is hurt on the job. In exchange, the employee generally cannot sue you for the injury. Pennsylvania treats it as mandatory from your first hire.

The Department of Labor and Industry says workers’ compensation coverage is required for any employer with at least one employee who could be injured in Pennsylvania. That covers almost everyone. A part-time bookkeeper, a remote employee working from a home office in Bucks County, and a warehouse crew all count.

Going without coverage is not a paperwork slip. L&I states that failing to carry workers’ compensation insurance is a criminal offense. Do not let a new hire start until the policy is bound.

You can buy a policy through your business insurance broker, and many payroll providers offer a pay-as-you-go policy that bills off each payroll run.

Once you have coverage, post the notice. L&I requires you to display Form LIBC-500, the workers’ compensation posting that tells employees you are insured and how to report an injury. Fill in your carrier’s name and contact information and put it where employees will see it.

Step 3: Set up local tax withholding

This is the step out-of-state employers almost never expect. In Pennsylvania, nearly every municipality and school district charges an earned income tax, and employers with a Pennsylvania work location are required to withhold it from every employee’s paycheck under a state law called Act 32.

Act 32 works off a code called the PSD code. A PSD code is a number that identifies the political subdivision, meaning the municipality and school district, where a person lives or works. You look up two codes for every employee: one for their home address and one for your work location. Then you withhold at the higher of the two rates and send the money to your county’s tax collector.

That is a lot to hold in your head, so we wrote a full guide. Read our Pennsylvania Act 32 guide before your first payroll. It walks through the lookup, the Residency Certification Form every employee must fill out, and how to register with your collector.

Philadelphia is different. The city does not use the Act 32 system. It has its own wage tax, collected by the Philadelphia Department of Revenue, and it applies to anyone who lives in the city and to anyone who works in the city, no matter where they live. If your first hire lives or works in Philadelphia, you also need to register with the city. The City says an out-of-state employer does not have to withhold if it has no physical location in Pennsylvania or is not subject to the City’s Business Income and Receipts Tax. Our guide to the Philadelphia wage tax for employers covers registration, the rates, and how to handle an employee who lives in the city but works at your suburban office.

A good payroll provider will handle both once you give them the right addresses and codes. The accounts and the address data are still your job.

Step 4: Report new hires within 20 days

Every state runs a new hire reporting program. It exists so that state agencies can enforce child support orders and catch unemployment fraud. Pennsylvania’s program runs through PA CareerLink, the state’s employment services network.

The PA Business One-Stop Shop explains the requirement: you report each new employee to the Pennsylvania New Hire Reporting Program, and you can do it online through the PA CareerLink system. The report asks for basic information you already have from the employee’s W-4 and I-9: name, address, Social Security number, date of hire, and your business name, address, and EIN, plus the name and phone number of a contact at your business.

A note on where the 20 days comes from. Federal welfare reform law sets a minimum standard that every state’s program must meet, and 20 days from hire is that standard. Pennsylvania wrote the same 20 days into its own law, at 23 Pa.C.S. 4392. The law counts the date of hire as the first day the employee works for pay, and it also covers rehires who were terminated, or who were laid off, furloughed, or on unpaid leave for more than 30 days.

Most payroll providers will file new hire reports for you, but ask. Some treat it as an add-on and skip it unless you turn it on.

Step 5: Post the required notices

Pennsylvania requires employers to display several notices in the workplace. The Department of Labor and Industry keeps a mandatory postings page that lists them and links to free downloads. Do not pay a poster service for something the state gives away.

The posters most new employers need cover these topics:

• Pennsylvania minimum wage and overtime rules, under the Minimum Wage Act.
• Equal pay, under the Equal Pay Law.
• Unemployment compensation, which tells employees how to file a claim.
• Workers’ compensation, which is the Form LIBC-500 from Step 2.
• Child labor rules, if you employ minors.
• Abstract of the Pennsylvania Human Relations Act, which covers discrimination.

Check the L&I mandatory postings page for the full current list, since it changes. Print each one, post it where employees gather, and keep a dated photo in your compliance folder. Federal posters are separate, and Philadelphia has its own set as well.

Step 6: Know your 2026 unemployment numbers

Unemployment compensation tax, or UC tax, is what funds jobless benefits. In Pennsylvania both you and your employees pay in. You pay a percentage of each employee’s wages up to a yearly cap, and you withhold a small percentage from every paycheck with no cap.

As a new employer you do not have a claims history yet, so L&I assigns you a standard new-employer rate. Later the state replaces it with a rate based on your own claims. The Department of Labor and Industry publishes the current figures on its Yearly Tax Highlights page. Here are the 2026 numbers.

The taxable wage base is the amount of each employee’s wages that your employer contribution applies to. Once an employee passes $10,000 in wages for the year, you stop paying employer UC tax on that person until January. The employee share of 0.07 percent has no cap and comes out of every paycheck.

L&I sends a rate letter after your account is set up. Give it to your payroll provider, and check the Yearly Tax Highlights page each year for the new figures.

Minimum wage: where Pennsylvania stands

Pennsylvania’s minimum wage is still $7.25 per hour. Most greater Philadelphia employers pay well above that, but the number matters for interns, seasonal help, and tipped positions.

A bill to change it, HB 2189, would phase the minimum up to $15. The Governor’s Office announced that the House passed the bill on March 24, 2026. In the Senate, a procedural vote failed 27 to 23, according to the Pennsylvania Association of Nonprofit Organizations minimum wage tracker. As of October 19, 2026, the General Assembly’s bill page shows the bill still in the Senate Labor and Industry Committee. A resolution to pull it out of committee dropped off the Senate calendar on September 29, 2026, and a new one was presented on September 30, 2026. Until the Senate acts, $7.25 remains the law.

You may also see a headline about Philadelphia’s minimum wage of $17.63. Do not apply it to your company unless you do business with the city. The City of Philadelphia’s FY27 minimum wage standard letter sets that rate, effective July 1, 2026, under the 21st Century Minimum Wage Standard. It applies to City contractors, subcontractors, lessees, concessionaires, and recipients of City financial aid. It does not apply to private employers generally.

What comes next

Once these six steps are done, your company can run a clean first payroll. The next question is which rules kick in as you grow. Our guide to employer headcount thresholds lays them out so you can see what is coming before you get there.

Print the checklist below and check each box before the first pay date.