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Dep’t of Labor & Indus. v. Workers’ Comp. Appeal Bd. (Lin & E. Taste), 27 EAP 2017, 2018 WL 3118537 (Pa. June 26, 2018)

July 23rd, 2018

In Dep’t of Labor & Indus. v. Workers’ Comp. Appeal Bd. (Lin & E. Taste), the Supreme Court of Pennsylvania held that the Construction Workplace Misclassification Act (“CWMA”) only applies to construction businesses for purposes of determining whether a worker is an employee or an independent contractor.  The CWMA prohibits the “improper classification of employees” as independent contractors so as to avoid liability for workers’ compensation benefits, and provides that “an individual who performs services in the construction industry for remuneration” may be classified as an independent contractor only if certain conditions are met.  Accordingly, the Claimant, who was injured performing renovations for a restaurant, did not fall within the CWMA and, therefore, could be classified as an independent contractor.

The facts in the case were undisputed.  The Claimant agreed to do remodeling work for Eastern Taste, a restaurant that his sister-in-law was opening, on a per diem basis.  While repairing a chimney, Claimant fell from a beam onto the cement floor, suffering traumatic spinal injuries and rendering him paraplegic.  Claimant subsequently filed a workers’ compensation claim against Eastern Taste and the Uninsured Employers Guaranty Fund, as Eastern Taste had not maintained workers’ compensation insurance.  The WCJ denied the claim, finding that Claimant’s work was not “in the regular course” of Eastern Taste’s business and that the employment was casual in nature.  The judge did note that this result would be different under the CWMA, which would classify Claimant as an independent contractor.  However, the WCJ determined the statute was inapplicable to a restaurant.

The Workers’ Compensation Appeal Board (“Board”) reversed, concluding that Lin’s employment was not “casual” in nature, and that Lin was an employee of Eastern Taste for purposes of workers’ compensation. However, the Commonwealth Court reinstated the WCJ’s decision after it determined that the CWMA is inapplicable under these circumstances, that the claimant otherwise failed to establish that he was an employee of the restaurant, and that he accordingly is ineligible or workers’ compensation benefits.

On appeal, the Supreme Court focused its inquiry on the phrase “construction industry” in the CWMA.  Using the Statutory Construction Act, the Court determined that the CWMA was enacted “to combat the deceptive business practice of classifying employees as independent contractors so as to avoid the expenses and responsibilities attending the employment relationship—a practice more widespread in construction than in many other industries.”  More importantly, the court found that Claimant’s interpretation would lead to an absurd and unreasonable result.  Under that interpretation, a homeowner that hires painters, plumbers, electricians, carpenters or other remodelers would become an employer under the CWMA and subject to its penalties. Therefore, the Supreme Court affirmed the decision of the Commonwealth Court.

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