Workers’ Compensation; statutory construction; whether Construction Workplace Misclassification Act (CWMA) only applies to circumstances where the putative employer’s industry or business is construction
Dep’t of Labor and Industry v. WCAB (Lin and Eastern Taste), 155 A.3d 103 (Pa. Cmwlth. 2017), allocatur granted Aug. 23, 2017, appeal docket 27 EAP 2017
Workers’ Compensation Appeal Board awarded benefits to claimant who was injured while doing remodeling work for Eastern Taste, a restaurant that had not yet opened for business. Claimant was paid on a per diem basis by the restaurant owner’s husband, brought some of his own tools. Claimant took direction from husband, who was not a remodeling or construction expert, as to the owner’s overall goals in remodeling, but not as to how to perform any specific task. WCAB found that claimant was an employee as defined by Section 104 of the Workers’ Compensation Act, 77 P.S. § 22, and did not reach the separate issue of whether claimant was an employee under the Construction Workplace Misclassification Act (CWMA), which applies to the construction industry and affects the determination of who is an independent contractor versus an employee. If a worker falls within the purview of the CWMA and does not meet the requirements to be considered an independent contractor under the CWMA, then that individual will be deemed to be an employee for purposes of workers’ compensation. See 43 P.S. § 933.3.
Department of Labor and Industry, Uninsured Employers Guaranty Fund appealed. Commonwealth Court reversed the WCAB, ruling that claimant was not an employee under Section 104 of the Workers’ Compensation Act. Commonwealth Court went on to address the CWMA issue, and held that the CWMA only applies to circumstances where the putative employer’s industry or business is construction, restaurant was not a construction business, so that the CWMA did not apply to claimant.
In interpreting the CWMA to conclude that it only applies to circumstances where the putative employer’s industry or business is construction, Commonwealth Court took several factors into account. First, comments of legislators during the enactment process revealed that “CWMA was intended to limit those who would be deemed independent contractors, as opposed to employees, and was intended to address concerns that some employers were misclassifying workers as independent contractors, rather than employees, in order to avoid things such as payment of unemployment taxes and workers’ compensation premiums.” 155 A.3d at 112. Second, the court relied on the fact that the Department of Labor and Industry appeared to interpret the CWMA to mean that it did not apply if the employer was not in the construction industry. Third, the court determined that interpreting the CWMA to apply to the restaurant in these circumstances would have the effect of turning every individual and business choosing to undertake any remodeling project into an employer “in the construction industry,” an absurd result.
The Supreme Court granted allocatur on the statutory construction issue of first impression whether CWMA only applies to circumstances where the putative employer’s industry or business is construction.
For more information, contact Kevin McKeon or Dennis Whitaker.