On October 13, 2010, Pennsylvania Governor Ed Rendell signed into law the Construction Workplace Misclassification Act, joining a growing number of states that have targeted an industry where misclassification of employees as independent contractors is believed to be most prevalent.

The law, which takes effect in 120 days following enactment, creates a strict definition of “independent contractor.”  No individual can be classified as an independent contractor unless he/she meets a three-part test where the individual:

(A)  has a written contract to perform services with the construction industry business;

(B)  is free from control or direction over the performance of such services under the contract and in fact; and

(C)  is customarily engaged in an independently established trade, occupation, profession or business.

This type of three-part standard is commonly called an “ABC” test – but the Pennsylvania standard is less onerous than the “ABC” laws governing independent contractors in the construction industry in New Jersey and New York, for example.   (Click “More” for link to “Steps to Ensure Compliance” below.)