A growing number of Americans no longer hold steady jobs with a single employer. Instead, they are now working in what is known as a “gig” format, although they are not musicians or artists. As a gig worker, an individual is hired to work on a particular project or for a defined period of time. Examples of such workers are employed by Airbnb, Uber, Lyft, and similar companies which use the internet to offer ride sharing, food delivery, lodging rentals, house cleaning and many other services to both individuals and corporate entities.
This flexible employment, also referred to as contingent or temporary labor, made up approximately 11 percent of the labor force in 2005. According to Forbes, gig workers could make up more than 50 percent of the work force by 2020. Many companies view their gig workers as independent contractors because it allows for lower costs and avoidance of some traditional employee benefits, such as pension payments, and government mandated benefits, such as health insurance, the employer’s half of social security taxes, and workers’ compensation and unemployment compensation benefits.
But, it is unlikely that a Pennsylvania employer could successfully argue that it should not be held liable for workers’ compensation benefits for an injured gig worker merely because the worker has been labeled as an independent contractor by contract or employer policy.
Instead, the traditional rules of “independent contractor” vs. “employee” will apply. Pennsylvania courts have been addressing this issue for years, most recently in the case of Agatha Edwards v. Workers’ Compensation Appeal Board (Epicure Home Care, Inc. and State Workers’ Insurance Fund), No. 1106 C.D. 2015, Filed March 10, 2016. In that case, the Commonwealth Court reiterated the applicable standard, which bears repeating here:
“While no hard and fast rule exists to determine whether a particular relationship is that of employer-employee or owner-independent contractor, certain guidelines have been established and certain factors are required to be taken into consideration…” Hammermill Paper Co. v. Rust Eng’g Co., 243 A.2d 389, 392 (Pa. 1968). Courts consider many factors including:
(1) control of manner the work is done; (2) responsibility for result only; (3) terms of agreement between the parties; (4) nature of the work/occupation; (5) skill required for performance; (6) whether one is engaged in a distinct occupation or business; (7) which party supplies the tools/equipment; (8) whether payment is by time or by the job; (9) whether the work is part of the regular business of the employer; and, (10) the right to terminate employment. Am. Rd. Lines v. Workers’ Compensation Appeal Board (Royal), 39 A.3d 603, 611 (Pa. Cmwlth. 2012); accord Hammermill.
Although no one factor is dispositive, control over the work to be completed and the manner in which it is to be performed are the primary factors in determining employee status. Universal Am-Can, Ltd. v. Workers’ Compensation Appeal Board (Minteer), 762 A.2d 328 (Pa. 2000); Am. Rd. Lines. Control exists where the alleged employer: possesses the right to select the employee; the right and power to discharge the employee; the power to direct the manner of performance; and, the power to control the employee.” Am. Rd. Lines, k39 A.3d at 611 (citing 3D Trucking v. Workers’ Compensation Appeal Board (Fine & Anthony Holdings Int’l), 921 A.2d 1281 (Pa.Cmwlth. 2007)).
Moreover, payment of wages and payroll deductions are significant factors, as is provision of workers’ compensation coverage. Id.; Martin Trucking Co. v. Workmen’s Comp. Appeal Board (Andrushenko & Clark Searfoss), 373 A.2d 1168 (Pa.Cmwlth. 1977). However, payment is not determinative. Am. Rd. Lines; see Martin. In addition, a tax filing denoting self-employment, while a relevant factor, is not dispositive on the issue. See Guthrie v. Workers’ Compensation Appeal Board (The Travelers’ Club, Inc.), 854 A.2d 653 (Pa.Cmwlth. 2004). Similarly, the existence of an employment or independent contractor agreement is another factor to consider, but it is not, by itself, dispositive. Hammermill.
In all probability, these are the same factors that the Workers’ Compensation Judges and appellate courts will review when determining if an injured gig worker is an employee or an independent contractor. The label placed on the worker, by contract or otherwise, will not be determinative. The existence of an employer-employee relationship is a question of law based on the facts presented in each case. Although it is the claimant’s burden to establish the existence of an employer-employee relationship, the Supreme Court has stated that “neither the compensation authorities nor the courts should be solicitous to find contractorship rather than employment, and that inferences favoring the claim need make only slightly stronger appeal to reason than those opposed.” Universal Am-Can, 762 A.2d at 330 (quoting Diehl v. Keystone Alloys Co., 156 A.2d 818, 820 (Pa. 1959). The bottom line is that simply calling workers “gig workers” or “contingent” or “temporary labor” will not relieve the true employer of liability for work-related injuries under the Pennsylvania Workers’ Compensation Act.
For a confidential analysis of your workers’ compensation issues, or questions about TRC’s workers’ compensation practice area, please contact Margaret M. Hock, Esquire at (412) 316-8647 or [email protected].
Important Notice: This information is intended for general guidance only, and should not be used as a substitute for specific legal advice. For specific legal advice applicable to your situation, you should consult an attorney of your choice. Although believed to be accurate when written, no guarantee of completeness or accuracy to your particular circumstances should be implied. Laws, regulations, and court decisions in this area change frequently, and you should consult the attorney of your choice for up-to-date information.