Employee or Independent Contractor? Workers' Compensation Edition

Let's continue our tour through the different classification standards with the Pennsylvania standard for workers' compensation. You can also check out our previous episodes on unemployment compensation, and wage and hour.

Now, back to business:

While no hard and fast rule exists to determine whether a particular relationship is that of employer-employee or owner-independent contractor, certain guidelines have been established and certain factors are required to be taken into consideration:  

"Control of manner work is to be done; responsibility for result only; terms of agreement between the parties; the nature of the work or occupation; skill required for performance; whether one is engaged in a distinct occupation or business; which party supplied the tools; whether payment is by the time or by the job; whether work is part of the regular business of the employer, and also the right to terminate the employment at any time." Hammermill Paper v. Rust Eng. Co., 243 A.2d at 389, 392 (Pa. 1968).  

Whether some or all of these factors exist in any given situation is not controlling. Further, while each factor is relevant, there are certain guidelines that have been elevated to be dominant considerations. The parties agree, and our case law confirms, that control over the work to be completed and the manner in which it is to be performed are the primary factors in determining employee status. Moreover, it is the existence of the right to control that is significant, irrespective of whether the control is actually exercised.

Universal Am-Can Ltd. v. W.C.A.B., 762 A.2d 328, 333 (Pa. 2000)(add'l citations and quotations omitted).

To add yet another wrinkle, Pennsylvania has a law called the Construction Workers Misclassification Act (PWMA):

For purposes of workers' compensation, unemployment compensation and improper classification of employees provided herein, an individual who performs services in the construction industry for remuneration 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 Pa. Cons. Stat. Ann. § 933.3 (West).

The various tests for UC, WC, wage and hour (and more) are similar - but different. They each have their own flavor. It can get pretty complicated.