Monday, June 5, 2017

Independent Contractor or Employee? - Construction Workplace Misclassification Act

Another wrinkle in the convoluted mess that is employee/independent contractor classification law:

As I've blogged previously, courts (and agencies) use different factors and standards to analyze classification depending on the underlying issue. So, there are different tests for wage and hour claims vs. unemployment compensation claims vs. workers' compensation claims.

The Commonwealth Court of Pennsylvania recently "published" (meaning it's now precedential) its 2016 opinion in Hawbaker v. WCAB. The Court analyzed worker classification for purposes of workers' comp . . . but with a twist: Pennsylvania's Construction Workplace Misclassification Act.

Under the Construction Workplace Misclassification Act, for purposes of unemployment compensation and workers' compensation, a worker in the construction industry is an independent contractor only if:
(1) The individual has a written contract to perform such services. 
(2) The individual is free from control or direction over performance of such services both under the contract of service and in fact. 
(3) As to such services, the individual is customarily engaged in an independently established trade, occupation, profession or business.
43 P.S. § 933.3. The Act goes on to identify several factors for determining whether "the individual is customarily engaged in an independently established trade, occupation, profession or business."

The Court affirmed the WCAB's holding that the worker in this instance was an independent contractor. However, three interesting tidbits from the ruling:
  • The Act does not require a separate contract for each job;
  • The Act does not require a contract for a specified duration; and
  • Although the putative employer had stopped assigning jobs to the claimant for awhile, the contract did not terminate - the Court looked to the text of the contract (and its provisions regarding termination) to conclude that the contract had not terminated. 
The Court's opinion highlights the importance of written agreements when using independent contractors.