Misclassification of Construction Workers
Pennsylvania recently joined a growing number of other states that have developed laws establishing certain requirements regarding the misclassification of workers as independent contractors. Pennsylvania's Construction Workplace Misclassification Act, effective in February 2011, determines whether workers in the construction industry are independent contractors or employees for purposes of workers' compensation and unemployment benefits.
Under the Act, an individual who performs services for money in the construction industry can be considered an independent contractor only if he or she: (1) has a written contract to perform the services (2) is free from control over performance of the services and (3) Has an independently established trade, occupation, profession, or business.
To be considered an independently established trade, occupation, profession or business the individual must meet these requirements:
(1) Possess the essential tools, equipment and other assets necessary to perform the services of the person for whom the services are performed;
(2) Have an arrangement in which he or she realizes a profit or suffers a loss as a result of performing the services.
(3) Perform services through a business in which he or she has a controlling interest.
(4) Maintain a business location that is separate from the location of the person for whom services are performed.
(5) Have previously performed the same or similar services for another person, while .
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