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L&I to Step Up Enforcement of Employee Status Regs

The BIA has become an industry compliance resource for our members with a primary focus on city codes and legislation. L&I’s Audits and Investigations Unit (AIU) recently announced its enforcement priorities for the upcoming year, and we want to make sure members are aware of the requirements governing the employee status of subcontractors.

The enforcement of independent contractor regulations for subcontractors is a planned area of focus for AIU, which explains the requirements as follows:

    “Subcontractors must always be licensed. They must carry a valid contractor or trade license (for trade work) whenever they are working. You are responsible for ensuring that construction for which you are responsible is only performed by licensed entities and their wage employees.”

The PA Office of Unemployment Compensation website states the following:

    “Employee or Independent Contractor. A worker is considered to be an employee unless proven otherwise. To be an independent contractor both of the following must be shown to the satisfaction of the department:
    1. The individual has been and will continue to be free from control or direction over the performance of the services involved, both under the contract of service and in fact, and
    2. As to such services, the individual is customarily engaged in an independently established trade, occupation, profession or business.”

The AIU is reminding you, as a builder, developer, or controlling owner that if your contractors or subcontractors of your contractors are using independent contractors, they must comply with local and state laws or risk contractor license revocation and steep fines.

For your convenience and that of your subcontractors and subs of subcontractors, we have provided a link below to the PA Employer & Tax Services website referencing requirements for insurance, workers’ compensation, and subcontractor agreements.

PA Employer & Tax Services/ Employee or Independent Contractor

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