As mentioned before Pennsylvania H-400, the Construction Workplace Misclassification Act, was passed effective February 10, 2011.  The act established the following criteria for determining independent contractors in the construction industry for workers compensation purposes.View the attachment from the PA Department of Labor and Industry.

 

1.  You and the individual must have a written contract to perform the services;

2.  The individual must be free from control or direction over performance of the services; and

3.  The individual must be customarily engaged in an independently established trade, occupation, profession, or business, which includes maintaining liability insurance during the term of the contract of at least $50,000.

 

Auditors will be following this law for policies that are new or renewing with an effective date of February 10, 2011.  When your workers compensation policy is audited, the auditor will request copies of the contracts between you and the individuals you hired to perform services on your behalf, perform the direction and control test and request copies of the certificates of insurance showing liability insurance.  One contract must be established for each policy year between you and the individual.  The one contract will be sufficient to cover all of the jobs the individual performs for you during the policy year, but a new contract must be established between you and the individual when your policy renews.  If any of these criteria are not met, the individual will be considered an employee and a premium charge will be made to your workers compensation policy.  For the full text of the law, please visit www.legis.state.pa.us.

 

Within the contract the auditors will be looking for the following:

1.  The name of the hiring contractor and address.

2.  The name of the subcontractor and address.

3.  Signatures of both and the date.

4.  The type of work performed by the subcontractor.

5.  That the subcontractor is an independent contractor and is not entitled to workers compensation, employee benefits, etc and is not under the control of the hiring contractor.

6.  The subcontractor has no employees and works by themselves (if this is the case).

7.  This will not be signed every job, but once a year per every subcontractor. 

 

The following documents might also be of assistance to you in understanding what is required:

Contact us if you have any questions or need any further information on this subject.  We will be happy to try to help you out.  We appreciate your business and thank you for being a loyal customer of Lawton Insurance Agency Inc.

 

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