PRIOR PRINTER'S NO. 1428 PRINTER'S NO. 3322
No. 1215 Session of 2005
INTRODUCED BY MUSTIO, TURZAI, ARMSTRONG, BALDWIN, BENNINGHOFF,
BOYD, CAPPELLI, CREIGHTON, FORCIER, HARRIS, PHILLIPS,
PICKETT, REICHLEY, ROHRER, SCAVELLO, STERN, R. STEVENSON,
T. STEVENSON, WILT, DENLINGER, NAILOR, DALLY, BASTIAN,
GODSHALL, CLYMER, PETRI, HICKERNELL, ZUG, SAYLOR, KAUFFMAN,
GILLESPIE, McILHINNEY, RUBLEY AND FRANKEL, MARCH 30, 2005
AS REPORTED FROM COMMITTEE ON LABOR RELATIONS, HOUSE OF
REPRESENTATIVES, AS AMENDED, DECEMBER 14, 2005
AN ACT
1 Amending the act of June 2, 1915 (P.L.736, No.338), entitled, as
2 reenacted and amended, "An act defining the liability of an
3 employer to pay damages for injuries received by an employe
4 in the course of employment; establishing an elective
5 schedule of compensation; providing procedure for the
6 determination of liability and compensation thereunder; and
7 prescribing penalties," defining "independent contractor";
8 further providing for liability to independent contractors,
9 for subcontracting with independent contractors and for proof
10 of insurance; providing for registration of independent
11 contractors and for presumptions relating to independent
12 contractors; imposing duties upon the Department of Labor and
13 Industry; and further providing for offenses.
14 The General Assembly of the Commonwealth of Pennsylvania
15 hereby enacts as follows:
16 Section 1. The act of June 2, 1915 (P.L.736, No.338), known
17 as the Workers' Compensation Act, reenacted and amended June 21,
18 1939 (P.L.520, No.281), is amended by adding a section to read:
19 Section 110. The term "independent contractor," when used in <--
20 this act, shall include a sole proprietor or partner owner of an
21 unincorporated business who:
1 (1) registers with the department as an independent
2 contractor;
3 (2) makes comparable services available to the general
4 public on a regular and consistent basis;
5 (3) controls the means and manner of work performed;
6 (4) realizes a profit or loss from contracted work and is
7 not paid by the hour, day or other time period;
8 (5) is not treated as an employe for purposes of income or
9 employment taxation with regard to work performed;
10 (6) furnishes significant tools, materials and equipment to
11 perform work;
12 (7) holds or has applied for a Federal employer
13 identification number, or has filed business or self-employment
14 income tax returns with the Pennsylvania Department of Revenue
15 or the Internal Revenue Service based on work or services in the
16 previous year; and
17 (8) fulfills other criteria established by the department.
18 SECTION 110. THE TERM "INDEPENDENT CONTRACTOR" MEANS THE <--
19 OWNER OF ANY BUSINESS ENTITY WHO DOES NOT EMPLOY OTHER PERSONS
20 AND WHO MEETS THE FOLLOWING REQUIREMENTS:
21 (1) HAS A WRITTEN AGREEMENT TO PERFORM SPECIFIC WORK FOR A
22 SPECIFIC AMOUNT OF MONEY;
23 (2) CONTROLS THE MEANS AND MANNER OF WORK PERFORMED, SUBJECT
24 TO ANY FEDERAL OR STATE REGULATORY REQUIREMENTS;
25 (3) RECEIVES COMPENSATION FOR WORK PERFORMED FOR A
26 COMMISSION OR ON A PER-JOB BASIS AND NOT ON AN HOURLY, DAILY OR
27 OTHER TIME PERIOD AND REALIZES A PROFIT OR LOSS FROM SUCH WORK;
28 (4) IS NOT PROHIBITED FROM MAKING COMPARABLE SERVICES
29 AVAILABLE TO THE GENERAL PUBLIC;
30 (5) MAINTAINS A SEPARATE BUSINESS AND FURNISHES SIGNIFICANT
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1 TOOLS, MATERIALS AND EQUIPMENT TO PERFORM WORK;
2 (6) HOLDS ONE OR MORE BANK ACCOUNTS FOR PURPOSES OF PAYING
3 BUSINESS EXPENSES OR OTHER EXPENSES RELATED TO WORK PERFORMED;
4 AND
5 (7) IS NOT TREATED AS AN EMPLOYE FOR THE PURPOSES OF INCOME
6 OR EMPLOYMENT TAXATION WITH REGARD TO WORK PERFORMED.
7 Section 2. Section 302(a), (d) and (f)(1) of the act,
8 amended July 2, 1993 (P.L.190, No.44), are amended to read:
9 Section 302. (a) A contractor who subcontracts all or any
10 part of a contract and his insurer shall be liable for the
11 payment of compensation to the employes of the subcontractor
12 unless the subcontractor primarily liable for the payment of
13 such compensation has secured its payment as provided for in
14 this act: Provided, That a contractor, subcontractor, and/or
15 their insurers shall not be liable for any compensation to any
16 independent contractor. Any contractor or his insurer who shall
17 become liable hereunder for such compensation may recover the
18 amount thereof paid and any necessary expenses from the
19 subcontractor primarily liable therefor.
20 For purposes of this subsection, a person who contracts with
21 another (1) to have work performed consisting of (i) the
22 removal, excavation or drilling of soil, rock or minerals, or
23 (ii) the cutting or removal of timber from lands, or (2) to have
24 work performed of a kind which is a regular or recurrent part of
25 the business, occupation, profession or trade of such person
26 shall be deemed a contractor, and such other person a
27 subcontractor. This subsection shall not apply, however, to an
28 owner or lessee of land principally used for agriculture who is
29 not a covered employer under this act and who contracts for the
30 removal of timber from such land.
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1 * * *
2 (d) A contractor shall not subcontract all or any part of a
3 contract unless the subcontractor has presented proof of
4 insurance under this act. Independent contractors shall not be
5 required to present proof of insurance.
6 * * *
7 (f) (1) Where a contractor is performing work for a public
8 body or political subdivision, all contractors and
9 subcontractors shall provide proof of workers' compensation
10 insurance to the public body or political subdivision effective
11 for the duration of the work. Proof of insurance shall not be
12 required for independent contractors.
13 * * *
14 Section 3. The act is amended by adding a section to read:
15 Section 304. (a) A person or insurer shall not be liable
16 for benefits under this act to an independent contractor which
17 performs services for the person.
18 (b) The department shall establish through regulation a <--
19 program for the registration of independent contractors to
20 include renewal time frames, random audit procedures and fees.
21 (B) THE INDEPENDENT CONTRACTOR SHALL REGISTER WITH THE <--
22 DEPARTMENT INDICATING HIS STATUS AS AN INDEPENDENT CONTRACTOR.
23 (c) It shall be a presumption under this act that an
24 individual is an independent contractor if that person is
25 registered with the department and registration shall not
26 preclude a finding by a court of independent contractor status
27 as to a person who is not registered. The form for registration
28 shall include an affirmative acknowledgment by the individual A <--
29 STATEMENT, BY WHICH THE INDIVIDUAL INTENDS TO BE LEGALLY BOUND,
30 that he or she is not eligible for benefits under the act from
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1 the contracting entities. The designation as an independent
2 contractor shall continue in force and effect unless the person
3 withdraws the registration in a manner established by
4 regulations. A registration, designation or withdrawal of
5 registration shall be deemed public information. The department
6 shall establish an electronic directory of all registered
7 independent contractors. The department shall furnish copies and
8 make available electronically the forms and registrations, upon
9 written request, to any employer or insurer or its authorized
10 representative.
11 (d) A referee may award benefits to an individual, upon
12 petition of an employe or dependents of a deceased employe or
13 any other party in interest at any time, if the injured person
14 can demonstrate that he or she was coerced to file a
15 registration by a party that is, in fact, the injured person's
16 statutory employer.
17 Section 4. Section 1102 of the act is amended by adding
18 clauses to read:
19 Section 1102. A person, including, but not limited to, the
20 employer, the employe, the health care provider, the attorney,
21 the insurer, the State Workmen's Insurance Fund and self-
22 insureds, commits an offense if the person does any of the
23 following:
24 * * *
25 (13) Is an employer under this act and knowingly and with
26 intent to defraud forces an employe to file an application under
27 section 304 to misrepresent their true relationship.
28 (14) Knowingly and with intent to defraud files an
29 application under section 304 that contains false information.
30 Section 5. This act shall take effect July 1, 2006.
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