“Independent Contractor” trouble
In the last several months, I have seen a number of issues on whether a worker is an independent contractor or an employee. Perhaps this has something to do with a tough economy and displaced workers taking types of jobs with looser relationships to employers. These cases arise across the spectrum, in construction, health care, transportation and hauling, and a number of other industries. The background is similar. The worker is hired, according to everyone, as a “contractor.” Documents are acknowledged, executed and filed, showing that the worker is an independent contractor and not an employee. The problem is that, under several areas of the law, this document is not determinative and does not necessarily mean that there is a contractor relationship.
The issue arises in workers compensation cases. Under the Pennsylvania Workers Compensation Act, employers are responsible for the reasonable medical bills and wage losses resulting from work-related injuries to their employees. Generally, contractors are not responsible for workers compensation benefits to subcontractors (although there are exceptions). So, the important question is often whether there was a contractor/subcontractor relationship or an employer/employee relationship. This issue involves a number of factors. One of the more important factors involves control over the worker’s work.
So, there are situations where “contractors” are really “employees” who are eligible to recover workers compensation benefits. If the “employer” has no insurance, a claim can also be made against the Uninsured Employer Guaranty Fund. If you or someone you know has been injured as a “contractor,” you could possibly be an employee. You should consult with an attorney to see if you may have rights.
For the employer, the presence of the Uninsured Employer Guaranty Fund only means that the Fund will be coming after you too.
Misclassifying a workers as a contractor could also have negative consequences under state and federal tax laws.
For employers in the construction trade, there could be severe penalties for misclassification. The Construction Workplace Misclassification Act provides for possible criminal penalties, including misdemeanor charges for intentional violations and summary charges for negligent violations. There could also be severe administrative penalties of up to $1,000 for the first offense and $2,500 for subsequent offenses, along with stop work orders.
Incorrect classification of a worker therefore can have severe consequences. Employers can benefit from consulting with an attorney on how to comply with the law. Workers who are hurt in the course and scope of their work should not forego a claim, because they may possibly be entitled to benefits under the law. Call The Seach Law Offices at (570)359-3283 to discuss your rights.