MISCLASSIFICATION OF WORKERS AS INDEPENDENT CONTRACTORS:

On Feb. 10, 2011, the Construction Workplace Misclassification Act took effect in Pennsylvania.  It is now illegal for any commercial and residential contractor, in Pennsylvania, to misclassifify employees as independent contractors.

The new law lays out a very narrow definition of “independent contractor.”  You cannot be classified as an independent contractor unless: 

1. You have a written contract to perform construction services with the business or person for whom you are doing the work.
2. The individual or business has no control or direction over the the services that you are providing, and:
3. You customarily and independently engage in the established trade, occupation, profession or business that you are doing for the employer.

What does it mean to “customarily engage in an independently established trade, occupation, profession or business”?  All of the below factors must be present: 

1. The individual possesses the essential tools to perform the services independent of the business for which the services are performed.
2. The individual must realize a profit or suffer a loss for the project.
3. The individual must have a proprietary interest in their business. 
4. The individual must have a business location separate from the business or person for whom   the services are being performed. 
5. The individual independently performed the same services for another person, or was available and able to independently perform these services for another person and represented that these services could be independently performed for another person. 
6. The individual must maintain liability insurance of at least $50,000 during the term of the contract.

In order to make sure that businesses or individuals do not coerce a worker into the category of independent contractor, the new law prohibits an employer from requiring or demanding that an individual enter into an agreement or sign a document which improperly classifies you as an independent contractor.  And, of equal importance, an employer may not retaliate against any person who exercises rights under this new law, including the filing of a complaint or reporting an employer’s noncompliance with the Act.   Finally, an employer may not intentionally contract with another employer knowing that the other employer intends to misclassify employees.

Each person who is misclassified is a separate violation of the law.  The Employer is subject to fines for each violation. 

If you feel that you, or someone you know, is being misclassified as an independent contractor instead of an employee, please call our office 888-288-9748 and we will guide you in reporting the violation and your possible remedies for being misclassified.