Injured Worker in PA Found to be Independent Contractor, Despite Construction Workplace Misclassification Act and Late Answer

Since the Pennsylvania Workers’ Compensation Act covers “employees,” but not “independent contractors,” the relationship between these two terms is something we have previously discussed on our blog.  A recent case from the Commonwealth Court of Pennsylvania on this topic featured an added twist of a late answer.

In Hawbaker v. Workers’ Compensation Appeal Board (Kriner’s Quality Roofing Services and Uninsured Employer Guaranty Fund), the injured worker was employed as a roofer, when he fell.  The injury was denied by the workers’ compensation insurance carrier, who alleged the injured worker (the “Claimant”) was actually an independent contractor, and not entitled to benefits under the Pennsylvania Workers’ Compensation Act.

Claimant filed a Claim Petition, and the insurance carrier did not file a timely Answer.  Under the law, all factual allegations made by the Claimant are deemed admitted if there is no timely Answer denying the allegations (Known as a “Yellow Freight” situation, for the case which first addressed it).  Claimant included in the allegations that he was an employee of the employer.  After hearing the evidence, the Workers’ Compensation Judge (WCJ) found the Claimant to have been an independent contractor, and denied the Claim Petition.  This was affirmed on appeal to the Workers’ Compensation Appeal Board (WCAB).

Upon further appeal, the Commonwealth Court of Pennsylvania affirmed the decision as well.  Back in 2011, the Pennsylvania Legislature passed the Construction Workplace Misclassification Act (CWMA).  This made it much for difficult for an insurance carrier to label a worker in the construction industry as an “independent contractor.”  The CWMA contained very specific requirements, ones which we find rarely met by employers.  In this case, however, the WCJ, and then the appellate courts, found the requirements actually met.

One of the more difficult requirements under the CWMA is that the employee/independent contractor have a written contract for services, and carry liability insurance.  Here, there had been a contract on a past project, and insurance on that project, but Claimant argued both lapsed.  The Court, however, found that the contract was not limited in time or scope and remained in place.  The remainder of the requirements, such as holding oneself out as a business (in this case, on a Facebook page), having his/her own tools, and having the freedom to experience profit or loss on a job, were all present according to the Court.

As to the “Yellow Freight” argument, the Court noted that this situation is not the same as a default judgment.  The injured worker does not automatically win.  Only “facts” are deemed admitted, and whether the injured party was an “employee” or an “independent contractor” was a legal conclusion, not a “fact.”  Since the evidence revealed the injured party to be an “independent contractor,” the allegation on the Claim Petition was meaningless.

While this case does not represent a significant change in the law, or make a landmark ruling, it does provide some clarification with regard to both the CWMA and the Yellow Freight situations.