The Pennsylvania Construction Workplace Misclassification Act Requirements and Tests

If you are a business owner or employer who works with independent contractors in the construction industry, you will want to make sure that you are in compliance with the Pennsylvania Construction Workplace Misclassification Act which goes into effect on February 11, 2011.

To be properly classified as an independent contractor, the construction worker must (1) have a written contract to perform services; (2) be free from the hiring party’s control; and (3) be customarily engaged in an independently established trade, occupation, profession, or business.

The law has not yet established clear guidelines on what constitutes a written contract or the amount of control. It’s still unknown whether a written contract must be separate from a bid or purchase order. These determinations will be up to the Department of Labor who will issue regulations, which will then be interpreted and applied by courts.

In order to meet the third element outlined above (“customarily engaged in an independently established trade, occupation, profession, or business”), the hired party must (1) possess the essential tools of the job; (2) realize the profit or loss; (3) perform the services through a business that he owns; (4) maintain an independent business location; (5) hold themselves out as available for another hiring party; and (6) maintain individual liability insurance during the term of the contract of at least $50,000.

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