Understanding Pennsylvania’s Construction Workplace Misclassification Act

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Although workers’ compensation insurance is intended to provide coverage and financial assurance for individuals who are injured on the job, ironically, it does not cover all independent contractors in the construction industry, even though construction is, arguably, the most dangerous industry in which to work (regarding workplace injuries).

The Pennsylvania Legislature passed the Construction Workplace Misclassification Act in order to establish a definition of “independent contractor” for purposes of workers’ compensation, unemployment compensation, and worker classification. Specifically, employers in Pennsylvania are automatically required to provide workers’ compensation coverage unless the worker meets the definition of an independent contractor who performs services in the construction industry for remuneration. Specifically, an individual is considered an independent contractor for these purposes if they:

  • Have a written contract to perform such services;
  • Are free from control or direction over performance; and
  • Are customarily engaged in an independently established trade, occupation, profession or business.

What Qualifies As A Written Contract?

Recently, the Commonwealth Court of Pennsylvania clarified what is considered a “written contract” under the state law. In order to be a binding written contract, there must be a written contract between the employer (or hirer) and the employee (or worker) before or at the time the worker is injured. A worker who signs an independent contractor agreement after being injured cannot be transformed from an employee covered under workers’ compensation to an independent contractor not covered under workers’ compensation.

Independently Established Trades

According to state law, an individual is customarily engaged in an independently established trade, occupation, profession or business with respect to services performed in the construction industry only if they:

  • Possess the essential tools, equipment, and other assets necessary to perform the services independent of the employer/hirer;
  • Have an arrangement with the employer/hirer such that the individual performing the services will fully realize the profit or loss as a result of the services;
  • Perform the services through a business in which they have a proprietary interest;
  • Maintain a business location that is separate from the employer/hirer;
  • Previously performed similar services for someone else in accordance with the above (while free from direction or control over these services, under contract) or hold themselves as able to perform similar services in accordance with the above (while free from direction or control over performance of the services); and
  • Maintain liability insurance during the contract of at least $50,000.

Put a Pennsylvania Workers’ Compensation Lawyer on Your Side

Time is of the essence in workers’ compensation cases. Hiring a skilled attorney as early as possible helps maximize your chance of receiving benefits to cover your injury.

The experienced attorneys at Solnick & Associates can help. We serve Philadelphia and the surrounding areas, including Montgomery, Bucks, Chester, and Delaware counties, as well as New Jersey. Contact us today for a free consultation.