Pennsylvania now has a misclassification law that mirrors Delaware’s law. Delaware’s Workplace Fraud Act, enacted in 2009, imposes stiff penalties on construction industry employers who improperly classify employees as independent contractors to save on business costs and avoid paying appropriate taxes. Sheldon Sandler previously posted about Delaware’s law.
Similarly, under Pennsylvania’s Construction Workplace Misclassification Act, an individual who performs services in the construction industry is considered an independent contractor in limited circumstances. The individual: (i) must have a written contract to perform services, (ii) be free from control or director over performance of such services both under the contract of service and in fact, and (iii) with respect to the individual’s services, the individual must be customarily engaged in independently established trade, occupation, profession or business.
In addition to this criteria, Pennsylvania’s law has particular requirements to prove that an individual is “customarily engaged” in an independently established trade, occupation, profession, or business. The law takes effect 120 days from October 13.