Monday, August 31, 2015

Employee vs Independent Contractor status? The Construction Workplace Misclassification Act decides!

Determining the existence of an Employment Relationship.
The injured worker must prove all of the elements of a workers' compensation claim.
Where the Employer disputes the existence of an Employee- Employer relationship, there must be sufficient, competent and credible evidence to support a finding of fact by the Worker's Compensation Judge.

Many past appellate decisions review the factual details of the work relationship, to determine if the essential indicia of an employment relationship exist.

There was a perceived recurring problem in the construction industry regarding the correct identification of individuals as "employees", which was addressed by the 2010 enactment of the Construction Workplace Misclassification Act.

A recent case reports the impact of this act in a rather typical construction employment relationship. The result is reviewed at: Scott Lee Staron d/b/a Lee's Metal Roof Coatings & Painting v. WCAB (Farrier), No. 2140 CD 2014, a panel decision of the Commonwealth Court of Pennsylvania, authored by Senior Judge Friedman on July 17, 2015.

Factual and Procedural Background

Employee slipped and fell off of a roof on May 6, 2011, striking his head and subsequently undergoing surgery to his left ankle and right knee. He was not released to regular duty work.

A Claim Petition was filed, as Employer denied the existence of an Employer-Employee relationship.

Their "relationship" reflects:

Employee answered Employer's advertisement seeking a painter.
Employee had 20 years experience. He worked for different contractors. He did a lot of "sub" work.
Employee was self-employed. He usually did his own work.
Employee owned his truck, tools and some equipment.
They met and discussed Employee's work experience and terms of hire.
Employer agreed to pay him $100 per day.
Employer told Employee he would need to sign a document, in order to work for Employer. 
(no agreement was signed before he started working).

Employee started painting on May 3. He used his own brushes, caulk gun, painter pants and knee pads.
Employer provided ladders and other necessary requirement.
Employee met at Employer's residence and traveled to the job site together.
On the 1st day, Employer told Employee to clean and paint the front part of a roof.
After that ... Employer did not provide any further instructions.

AFTER the injury, Employee met with Employer after his hospital release. Employer presented an Independent Contractor - Sub-Contractor Agreement. This document bears Employee's signature and is dated May 6, 2011, the date of injury. In his testimony, Employee declined to identify his signature. He "might have" signed it.

Employee retrieved his car and his tools. He was paid $300 for his 3 days of work.
Employee did not return to work, in any capacity after May 6, 2011.

WCJ Decision

Employee was found credible regarding his hiring and work for Employer.
He was credible regarding his injuries, treatment and disability.
[He was not credible regarding the declining to identify his signature on the Agreement].

WCJ found Employee had not entered into the Agreement at the time he sustained his work-related injury on May 6, 2011.
Accordingly, he was an Employee not an independent contractor, at the time of his injury.

WCAB affirmed WCJ.

Commonwealth Court Decision

WCJ decision is affirmed. He was an Employee.

Employer argued the Construction Workplace Miscalculation Act (CWMA) did not require the individual to sign a written contract prior to an injury, in order to be considered an independent contractor. This argument was rejected.

HERE, Employee worked for Employer for three (3) days in exchange for remuneration and did not sign an Agreement, until after his injury.

Section 3(a)(1) of the CWMA is unambiguous:

"An Individual who performs services in the construction industry for remuneration IS an independent contractor ONLY IF ... [he] has a written contract to perform such services.
[emphasis added]. 43 P.S. section 933.3(a)(1).

It is simple. As there was no written contract, Employee could not be considered an independent contractor under the CWMA. The fact that employee later signed a written contract did not change his employment status, as it existed at the time of his injury.

Practice Pointers:
1. It is difficult to judge with much accuracy, BUT prior to the enactment of the CWMA, would this individual be considered an Independent-Contractor?

There certainly are sufficient facts presented for a Worker Compensation Judge to conclude that the parties intended that this Individual was an Independent-Contractor. 
Prior appellate decisions looked at all of the facts - workers' experience, tools, method of payment, uniforms ... 

but the most important element to establish an Employer-Employee relationship is the control over the details of the work performed by the worker. The greater control exerted over the individual, the more likely one would be considered and employee. 

Query: Here was it the "pre-injury" intention of the parties to enter into an Independent-Contractor relationship? Did they "ratify" their pre-injury intentions by the post-injury document? Now, these thoughts are not controlling. 

As we see from this Commonwealth court decision, the unambiguous language of the CWMA will be interpreted and rather strictly applied. 
This result reflects the intention of the CWMA; to eliminate this type of post-injury "he said; she said" episodes.  

2. Word to the Wise ... Insurers and Employers ... get your documents in order. Establish a business practice to prepare, sign and retain this type of agreement. 

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