The Pennsylvania Construction Workplace Misclassification Act
Employers in the construction industry should be mindful of the Pennsylvania Construction Workplace Misclassification Act. This Act provides criteria to determine whether a construction worker is an independent contractor or an employee entitled to workers’ compensation insurance coverage and requires those working on construction sites to be classified as employees unless the employer can demonstrate that he or she is a legitimate independent contractor.
The criteria for determining whether a worker is an independent contractor are: (i) does the worker have a written contract to perform such services; (ii) is the worker free from direction by the employer over performance of their services; and (iii) is the worker engaged in an independent trade?
Accordingly, an employer who wishes to classify a worker as an independent contractor should insist on a written and executed independent contractor agreement with the worker that sets forth a series of representations by the worker that: (a) the services rendered by the worker require a specific skill; (b) the worker will be using his or her own tools; (c) the worker will independently determine how the services are to be performed for the employer; (d) the worker will provide liability insurance for the services rendered by the worker; (e) the worker will be paid a fixed fee for his or her services; (f) the worker will pay all taxes due on fixed fee received by the worker; and (g) the worker is entitled to render services for third parties in addition to the employer.
An employer who intentionally misclassifies an employee as an independent contractor may be found guilty of a third-degree misdemeanor.
Lundy, Beldecos & Milby‘s construction attorneys can help contractors determine whether a worker should be classified as an independent contractor or an employee and, if appropriate, prepare an independent contractor agreement. Contact us for more information.