Construction Workplace Misclassification Act – More Hurdles to Overcome When Using Subcontractors – THE GREY AREA IS NOW GONE!
Construction Workplace Misclassification Act – More Hurdles to Overcome When Using Subcontractors – THE GREY AREA IS GONE!Effective February 11, 2011, the Construction Workplace Misclassification Act in Pennsylvania strictly regulates the use of individuals as independent contractors in the construction industry. If any worker who does not meet all of the following criteria is misclassified as an independent contractor, the hiring party business, and its officers and agents, may be civilly liable, may face criminal prosecution, and may be subject to stop work orders:
- The individual must be free from the hiring party’s control or direction of the services. There is a written independent contractor agreement between the hiring party and the individual.
- The individual possesses the essential tools necessary to perform the services. The arrangement between the hiring party and the individual is structured so that the individual may realize a profit or suffer a loss from the engagement.
- The individual has an ownership interest in his or her business that is contracted to perform the services for the hiring party.
- The individual must have a physical business location separate from the hiring party’s location.
- The individual must have either previously performed the same types of services for other parties or must hold himself out to other potential customers as being able to perform such services.
- The individual must maintain for the duration of the contract liability insurance of at least $50K
The grey area is now gone in PA and the penalties can be severe! This Act reinforces the need for well structured contracts and certificate of insurance review programs. We can help. KMRD Partners provides risk management consulting and property & casualty insurance to protect against potentially catastrophic losses that wait on the other side of one minute from normal. Contact us at firstname.lastname@example.org before one minute from normal strikes your construction company, and we will identify and correct coverage and service gaps