Cutting Corners with Workers’ Compensation Premiums May Put Construction Employers at Risk

Pond Lehocky Stern Giordano Associate Susan Nanes Contributes to The Legal Intelligencer.

Should a construction employer seek to cut corners and avoid paying workers’ compensation premiums (and other required taxes), or even just err by calling its workers independent contractors, they may be subject to civil and even criminal penalties. That’s according to Pond Lehocky Attorney Susan Nanes in a recent Construction Law article published in The Legal Intelligencer. 

In her article, Nanes explains the background and basics of the Construction Workplace Misclassification Act (CWMA), which was enacted in 2010. According to Nanes, “the Pennsylvania House Labor Relations Committee sought to curb construction employers’ common practice, intentional or otherwise, of deeming workers to be independent contractors rather than employees.” 

The CWMA requires that in order for a construction worker to be classified as an independent contractor, they must meet these three criteria: 

  1. The individual has a written contract to perform such services. 
  1. The individual is free from control or direction over performance of such services both under the contract of service and in fact. 
  1. As to such services, the individual is customarily engaged in an independently established trade, occupation, profession or business.  

CWMA ensures that employers will not be able to as easily misclassify their workers as independent contractors in order to avoid paying workers’ compensation or unemployment compensation. If employers do misclassify their workers, they are subject to high fines, which incentivizes them to correctly classify their workers.  

“The penalties for failing to comply are real and the Department and the judiciary seem motivated to enforce it,” says Nanes. 

To read the full article, click here.

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