Act 72 (02-10-2011)
Misclassification of employees as independent contractors is illegal for all commercial and residential construction in PA.
In addition to the guidelines shared for Unemployment Compensation, independent contractors must also maintain liability insurance of at least $50,000.
Under Act 72, a company or its officer or agent may be subject to penalties if the business fails to properly classify an employee under the PA Workers Compensation Act or Unemployment Compensation Law.
Typically, you will want to ask for proof of insurance from your independent sub-contractors. You can set a minimum acceptable limit that is higher than the $50,000 required by the PA Department of Labor & Industry.
Specifically, you should ask for a Certificate of Insurance – a snapshot of coverage in place as of that date.
You may serve as an independent sub-contractor. In that case, you can expect to provide proof of insurance. If the general contractor also asks to be named as Additional Insured, realize you are “sharing” your liability limit.
A helpful guide is available at the PA Department of Labor & Industry website, under Employer UC Services.
That guide offers, in part, the following advice:
The following factors are NOT conclusive proof of independent contractor status:
DISCLAIMER: This brochure is provided as a convenient summary. It is not an offer of coverage. Details, limitations and exclusions are found in the actual policies.