Dep't of Labor & Indus. v. Workers' Comp. Appeal Bd.

[J-7-2018]
IN THE SUPREME COURT OF PENNSYLVANIA
EASTERN DISTRICT
SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.
DEPARTMENT OF LABOR AND : No. 27 EAP 2017
INDUSTRY, UNINSURED EMPLOYERS :
GUARANTY FUND : Appeal from the Order of
: Commonwealth Court entered on
: February 17, 2017 at No. 627 CD
v. : 2016 reversing the order entered on
: March 23, 2016 by the Workers’
: Compensation Appeal Board at No.
WORKERS’ COMPENSATION APPEAL : A15-1320.
BOARD (LIN AND EASTERN TASTE) :
: ARGUED: March 6, 2018
:
APPEAL OF: FU XIANG LIN :
OPINION
JUSTICE WECHT DECIDED: June 26, 2018
In this appeal, we consider whether an individual contracted to perform renovations
for a restaurant falls within the Construction Workplace Misclassification Act (“CWMA” or
“the Act”), 43 P.S. §§ 933.1-933.17, such that he may be eligible for compensation under
the Workers’ Compensation Act.1 The Commonwealth Court determined that the CWMA
is inapplicable under these circumstances, that the claimant otherwise failed to establish
that he was an employee of the restaurant, and that he accordingly is ineligible for
workers’ compensation benefits. We affirm the order of the Commonwealth Court.
The material facts are undisputed. On February 21, 2011, Fu Xiang Lin began
performing remodeling work for Eastern Taste, a restaurant that had not yet opened for
1 Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2708.
business. Lin and three other individuals were hired by Lin’s sister-in-law, Sai Zheng
Zheng, who was the owner of Eastern Taste. They did not sign a written contract, but Lin
was to be paid for his services on a per diem basis. Zheng’s husband, Kond Bin Wang,
oversaw the project. Wang told Lin what sort of work needed to be done, but he did not
direct Lin’s specific activities because Lin was a seasoned remodeler. Lin had worked in
remodeling for fifteen years, and he was the most experienced individual involved in the
project. Although Wang purchased the materials necessary for the project, Lin brought
and used his own tools. Lin was hired only to complete the remodeling work, and he was
not expected to work at the restaurant after it opened.
On March 28, 2011, while repairing a chimney, Lin fell from a beam and landed on
a cement floor, suffering serious injuries. In addition to numerous bone fractures, the
impact caused trauma to Lin’s spinal cord, rendering him paraplegic. On December 22,
2011, Lin filed a workers’ compensation claim petition against Eastern Taste. On
February 27, 2012, because Eastern Taste did not maintain workers’ compensation
insurance, Lin additionally filed a petition for benefits from the Uninsured Employers
Guaranty Fund (the “Fund”).2 Both Eastern Taste and the Fund filed answers denying,
inter alia, the existence of an employment relationship. Lin’s claim petitions were
consolidated and assigned to Workers’ Compensation Judge Bruce Doman (the “WCJ”)
for disposition.
At a hearing before the WCJ on April 27, 2012, Lin testified on his own behalf.
Eastern Taste presented the testimony of Wang and Gheng Renkuar, another individual
2 The Fund, as prescribed by statute, exists “for the exclusive purpose of paying to
any claimant or his dependents workers’ compensation benefits due and payable . . . and
any costs specifically associated therewith where the employer liable for the payments
failed to insure or self-insure its workers’ compensation liability . . . at the time the injuries
took place.” 77 P.S. § 2702(c). If an injured employee’s claim “is not voluntarily accepted
as compensable, the employee may file a claim petition naming both the employer and
the fund as defendants.” 77 P.S. § 2704.
[J-7-2018] - 2
who worked on the remodeling project. Based upon the testimony, the WCJ concluded
that the “critical facts in this matter are essentially undisputed,” and made the following
findings:
a. Eastern Taste is a restaurant, not a construction business.
b. [Lin] was hired to do remodeling before the restaurant had ever opened.
c. The most experienced person on the job in the construction business
was [Lin].
d. The owner’s husband was in charge of what needed to be done.
e. [Lin] was paid on a per diem basis to do it along with three others.
f. [Lin] used his own tools and van. The owner’s husband provided tools
and materials as well.
WCJ Decision, 4/17/2013, at 3. The WCJ further found that Lin’s work was not conducted
“in the regular course” of Eastern Taste’s business, and that Lin’s “employment was
casual in character.” Id.3 Accordingly, the WCJ concluded that Lin failed to prove that he
was an employee4 of Eastern Taste, and, thus, that Lin was ineligible for workers’
compensation benefits.
Nonetheless, the WCJ recognized that “the result would be entirely different” if the
CWMA applied. Id. at 4. In relevant part, the CWMA prohibits the “improper classification
of employees” as independent contractors so as to avoid liability for workers’
3 As the Commonwealth Court later noted, although the WCJ characterized these
latter determinations as findings of fact, they more accurately are classified as
conclusions of law.
4 Section 104 of the Workers’ Compensation Act defines employees as “[a]ll natural
persons who perform services for another for a valuable consideration,” but excludes from
the definition “persons whose employment is casual in character and not in the regular
course of the business of the employer.” 77 P.S. § 22.
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compensation benefits, and provides that “an individual who performs services in the
construction industry for remuneration” may be classified as an independent contractor
only if certain conditions are met. 43 P.S. § 933.3(a).5 The WCJ concluded that the
CWMA was inapplicable to Eastern Taste because it “is a restaurant in the restaurant
business and not in the construction business.” WCJ Decision, 4/17/2013, at 4.
With regard to the relationship between Wang and Lin, the WCJ observed that
Wang merely informed Lin what tasks he wanted to be completed, and it was Lin’s job to
do them. The WCJ opined that “[t]his is essentially the same relationship that property
owners typically have with painters, plumbers, electricians, carpenters and other
remodelers. These specialists bring their time and expertise.” Id. Essentially, the WCJ
concluded that, although these types of contractual relationships may involve construction
activities, the individual who hires such a specialist is not “in the construction industry” for
purposes of the CWMA. Because the CWMA was inapplicable, the WCJ determined that
Lin’s classification as an independent contractor rather than an employee was not
improper under 43 P.S. § 933.3. Accordingly, the WCJ entered an order denying Lin’s
claim petitions.
Lin appealed the WCJ’s order to the Workers’ Compensation Appeal Board
(“Board”). On January 6, 2015, the Board reversed, concluding that Lin’s employment
5 Specifically, for purposes of the CWMA, an “individual who performs services in
the construction industry for remuneration” may be classified as an independent
contractor only if:
(1) The individual has a written contract to perform such services.
(2) The individual is free from control or direction over performance of such
services both under the contract of service and in fact.
(3) As to such services, the individual is customarily engaged in an
independently established trade, occupation, profession or business.
43 P.S. § 933.3(a).
[J-7-2018] - 4
was not “casual” in nature, and that Lin was an employee of Eastern Taste for purposes
of workers’ compensation. However, because the Board based its decision upon the
general definition of an employee under the Workers’ Compensation Act, it did not
consider the applicability of the CWMA. The Board remanded to the WCJ to make any
necessary findings and to enter an award of compensation. On October 28, 2015, in
accordance with the Board’s order, the WCJ made additional findings regarding the extent
of Lin’s injuries, wages, and litigation costs, then entered an order granting Lin’s claim
petition against Eastern Taste, with the Fund secondarily liable for the payment of
compensation.
The Fund appealed the WCJ’s order to the Board. However, because the Board
previously had considered the dispositive legal issue, the Fund merely sought to make
the Board’s earlier order final for purposes of appeal to the Commonwealth Court.6 The
Board obliged on March 23, 2016, and the Fund appealed the Board’s order to the
Commonwealth Court.
On February 17, 2017, the Commonwealth Court reversed the Board’s order,
holding that Lin is ineligible for workers’ compensation benefits. Dep’t of Labor & Indus.,
Uninsured Emp’rs Guar. Fund v. W.C.A.B. (Lin & Eastern Taste), 155 A.3d 103 (Pa.
Cmwlth. 2017). As was the case before the WCJ and the Board, the dispositive question
was whether Lin was an employee of Eastern Taste or an independent contractor.
Because independent contractors cannot recover workers’ compensation benefits, the
Commonwealth Court noted, “[w]hether one’s status is that of an employee or
6 See Shuster v. W.C.A.B. (Pa. Human Relations Comm’n), 745 A.2d 1282, 1287
(Pa. Cmwlth. 2000) (“[N]o matter whether a party appeals the Board’s decision . . . or the
WCJ’s decision . . . he or she is required to follow the normal procedure to appeal a WCJ
decision which is to file an appeal with the Board within 20 days after notice of that
decision has been received. The party can then file a motion with the Board requesting
that the Board make its previous order final.”) (citation omitted).
[J-7-2018] - 5
independent contractor ‘is a crucial threshold determination that must be made before
granting workers’ compensation benefits.’” Id. at 109 (quoting Universal Am-Can, Ltd. v.
W.C.A.B. (Minteer), 762 A.2d 328, 330 (Pa. 2000)).
The Commonwealth Court first reviewed the Board’s stated bases for reversal of
the WCJ’s decision and determined that the Board relied upon facts that were inconsistent
with the WCJ’s findings. Stressing that the WCJ’s findings of fact are binding upon the
Board if supported by substantial evidence, the Commonwealth Court observed that the
Board “exceeded its authority by making ‘findings,’ which, at a minimum, went beyond
those made by the WCJ.” Id. Because the WCJ’s findings were supported by substantial
evidence, the court concluded that “the Board engaged in impermissible fact-finding and
then relied on those ‘facts’ to support its conclusion that [Lin] was an employee.” Id. In
other words, “[t]he Board did not base its legal conclusion on the facts as found by the
WCJ, and that was error.” Id. (emphasis in original).
After rejecting the Board’s “findings” and confining its inquiry to the facts as found
by the WCJ, the Commonwealth Court analyzed whether those facts supported the
conclusion that Lin was an employee of Eastern Taste, as opposed to an independent
contractor. To resolve that question, the Commonwealth Court relied upon the
multifactorial inquiry that this Court set forth in Universal Am-Can, which directs a court
to consider:
Control of manner work is to be done; responsibility for result only; terms of
agreement between the parties; the nature of the work or occupation; skill
required for performance; whether one is engaged in a distinct occupation
or business; which party supplied the tools; whether payment is by the time
or by the job; whether work is part of the regular business of the employer,
and also the right to terminate the employment at any time.
Id. at 110 (quoting Universal Am-Can, 762 A.2d at 333). The Commonwealth Court
stressed the WCJ’s finding that Wang was “in charge of what needed to be done,” but
[J-7-2018] - 6
that he “did not control the manner in which the work was to be completed.” Id. The court
reiterated the WCJ’s comparison to the contractual relationship between property owners
and “painters, plumbers, electricians, carpenters and other remodelers,” who have the
status of independent contractors, not employees. Id. The court noted that Eastern Taste
is a restaurant, not a construction business, and that Lin was hired to perform remodeling
work, not to work in the restaurant when it opened. Lastly, the Commonwealth Court
found significance in Lin’s use of his own tools. Because these factors tended to
demonstrate that Lin was an independent contractor, the Commonwealth Court found no
error in the WCJ’s original determination that Lin failed to satisfy his burden of proof to
establish an employer/employee relationship. Id. at 110-11; see Universal Am-Can, 762
A.2d at 330 (“It is a claimant’s burden to establish an employer/employee relationship in
order to receive benefits.”).
Having rejected the Board’s conclusion that Lin was an employee of Eastern Taste
under Section 104 of the Workers’ Compensation Act pursuant to the Universal Am-Can
framework, the Commonwealth Court turned to the separate inquiry of whether Lin may
be deemed an employee pursuant to the CWMA. Noting that this was a question of first
impression, the Commonwealth Court observed that, as a general matter, “[t]he CWMA
concerns the construction industry and affects the determination of who is an independent
contractor versus an employee” for purposes of workers’ compensation. Lin, 155 A.3d at
111. Although Section 2 of the CWMA, 43 P.S. § 933.2, incorporates the definitions of
“employer” and “employee” used in Sections 103 and 104 of the Workers’ Compensation
Act, 77 P.S. §§ 21, 22, the CWMA sets forth distinct criteria that must be satisfied before
an “individual who performs services in the construction industry for remuneration” may
be classified as an independent contractor for purposes of workers’ compensation. See
43 P.S. § 933.3(a). The Commonwealth Court observed that, “[i]f a worker falls within the
[J-7-2018] - 7
purview of the CWMA and does not meet the requirements to be considered an
independent contractor under the CWMA, then that individual will be deemed to be an
employee for purposes of workers’ compensation.” Lin, 155 A.3d at 111.
The Commonwealth Court noted that the operative language of the CWMA
restricts the application of the Act to services performed “in the construction industry.” 43
P.S. § 933.3(a). Thus, the court reasoned, whether the Act applies to a given individual
depends upon the correct interpretation of this phrase. Noting that the CWMA defines
the term “construction,”7 but provides no definition for the term “industry,” the
Commonwealth Court concluded that the latter term must be construed according to its
common and approved usage. Lin, 155 A.3d at 112 (citing 1 Pa.C.S. § 1903(a)). The
court observed that “[t]he term ‘industry’ is commonly defined as ‘skill, employment
involving skill’ and ‘a department or branch of a craft, art, business or manufacture.’” Id.
(quoting Industry, W EBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1155 (2002)).
Lin argued that the CWMA applied to his relationship with Eastern Taste because
the Act does not specify a primary business purpose of the employer as a prerequisite to
its applicability; Eastern Taste had not yet opened for business and was engaged only in
construction activities at the time of his injury; and, by undertaking the remodeling project,
Eastern Taste essentially took on the role of a general contractor in the construction
industry. The Commonwealth Court elected to give Lin the “benefit of the doubt that
arguably, the meaning of the phrase ‘in the construction industry’ is ambiguous,” and thus,
the court turned to the rules of statutory construction in order to ascertain the intent of the
General Assembly in drafting the CWMA. Id; see 1 Pa.C.S. § 1921(c).
7 The CWMA defines “construction” as “[e]rection, reconstruction, demolition,
alteration, modification, custom fabrication, building, assembling, site preparation and
repair work done on any real property or premises under contract, whether or not the work
is for a public body and paid for from public funds.” 43 P.S. § 933.2.
[J-7-2018] - 8
Pursuant to the canons of statutory construction, the Commonwealth Court
consulted the legislative history of the CWMA, as well as the manner in which the
Pennsylvania Department of Labor and Industry (“Department”) has interpreted and
applied the Act. See 1 Pa.C.S. § 1921(c)(7)-(8). The court noted that, during debates in
the Pennsylvania House of Representatives, Representative Brian Lentz, a sponsor of
the bill that would become the CWMA, stated that “[s]ome construction firms routinely
classify their employees as ‘independent contractors’ for the specific purpose of avoiding
the payment of decent wages, health benefits, pensions, as well as Federal and State
and local employment taxes that other legitimate employers pay.” Lin, 155 A.3d at 112
n.17 (quoting H.R. JOURNAL, No. 193D-33, at 743 (May 5, 2009)) (emphasis added). The
court further relied upon an annual report issued by the Department’s Secretary in 2015,
which detailed the Department’s enforcement of the Act during 2014. Notably, the
Department provided explanations for instances in which the Department found no
violation of the CWMA, which included determinations that the employers in question
were not in the construction industry. Id. at 113. Moreover, the Department’s standard
complaint form for the reporting of alleged CWMA violations asks complainants to identify
the type of construction services that the putative employer performs. Id. The
Commonwealth Court accordingly concluded that both the legislative history of the
CWMA and administrative guidance from the Department suggest that “it is the character
and context of the putative employer that is determinative” of the applicability of the
CWMA. Id. (emphasis added).
Finally, the Commonwealth Court noted that courts must “presume that the
General Assembly did not intend a result that is absurd or unreasonable.” Id.; see 1
Pa.C.S. § 1922(1). Under Lin’s suggested interpretation of the CWMA, the court
reasoned, the Act would apply to contractual relationships far beyond its intended reach,
[J-7-2018] - 9
“turning every individual and business choosing to undertake any remodeling project into
an employer ‘in the construction industry.’” Id. at 114. In the court’s view, this would be
an absurd and unreasonable result, rendering Lin’s interpretation of the Act untenable.
The Commonwealth Court concluded that, “when determining whether the CWMA
is applicable to the situation at hand, the construction activity must be analyzed and
considered in the context of the putative employer’s industry or business.” Id. Returning
to the WCJ’s decision in the instant case, the Commonwealth Court agreed that the
CWMA is inapplicable because Eastern Taste was “a restaurant business and not a
construction business,” and, as such, was not “in the construction industry.” Id.
Consequently, the Commonwealth Court found no error in the WCJ’s decision, and it
reversed the Board’s contrary order.
Lin filed a petition for allowance of appeal, which we granted in order to consider
the following question:
Whether the Commonwealth Court’s decision interpreting the language of
the Construction Workplace Misclassification Act (CWMA) to mean that the
CWMA only applies to circumstances where the putative employer’s
industry or business is construction was in error?
Dep’t of Labor & Indus., Uninsured Emp’rs Guar. Fund v. W.C.A.B. (Lin & Eastern Taste),
170 A.3d 1006 (Pa. 2017) (per curiam).
Before this Court, Lin reiterates the arguments that he advanced before the
Commonwealth Court. He argues that the applicability of the CWMA turns upon the
nature of the work performed, not the employer’s business purpose. Lin notes that the
Act “makes no such distinctions as to what the primary business purpose of the employer
may be,” nor does it “state that the business industry of the employer controls whether
the [A]ct applies.” Brief for Lin at 13. Instead, Lin argues, the CWMA focuses upon “the
services being performed by the individual.” Id. Lin further notes that Eastern Taste was
[J-7-2018] - 10
not yet operating as a restaurant when he sustained his injuries, so the “only operation of
Eastern Taste at the time of the accident was restaurant construction.” Id. Because
Eastern Taste elected to undertake the remodeling project, Lin argues that “they in
essence took on the role of a general contractor in the construction industry.” Id. Thus,
Lin argues that he was performing “services in the construction industry for remuneration”
and that, because his relationship with Eastern Taste did not satisfy the express statutory
criteria provided in 43 P.S. § 933.3(a)(1)-(3), he could not be classified as an independent
contractor for purposes of workers’ compensation.
The Fund argues that the Commonwealth Court correctly identified the threshold
inquiry that controls the applicability of the CWMA, namely whether the putative
employer’s “industry or business is construction.” Brief for Fund at 11. The Fund
suggests that this interpretation is commanded by the Act’s plain language. Even if the
language of 43 P.S. § 433.3(a) is ambiguous, however, the Fund contends that the
Commonwealth Court correctly employed the principles of statutory construction to
ascertain the General Assembly’s intent.
The Fund notes that the CWMA “was enacted to address a prevalent problem in
the construction industry where construction businesses would misclassify employees as
independent contractors in order to avoid paying expenses such as unemployment
compensation taxes and workers’ compensation premiums.” Id. at 14. Like the
Commonwealth Court, the Fund points to statements of legislators who were considering
the bill that became the CWMA, and notes that their focus was upon abuses by
“construction firms” and employers “in the construction industry.” Id. at 14-17. The Fund
notes that debates in the Pennsylvania House of Representatives specifically addressed
whether the Act would apply to homeowners who hire a contractor for home renovations,
and that Representative Lentz, a sponsor of the bill, asserted that it would not. Id. at 16
[J-7-2018] - 11
(citing H.R. JOURNAL, No. 193D-33, at 755 (May 5, 2009)). According to the Fund, this
legislative history makes clear that the CWMA was directed at “construction businesses,
i.e., putative employers who sell and perform construction services, not, as [Lin] argues,
any person or business not in the construction business that hires someone on a limited
basis to undertake a remodeling project.” Id. at 17.
The Fund further relies upon the administrative materials that the Commonwealth
Court cited, including the Department’s CWMA complaint form and its 2014 annual report
of CWMA enforcement activities. Id. at 20-21. The Fund observes that the CWMA
complaint form requires the complainant to specify the type of construction services that
the putative employer performs, and that the Department rejects enforcement referrals
where that employer is not in the construction industry. The Fund argues that we should
defer to the Department’s treatment of the nature of the putative employer’s business as
dispositive of the CWMA’s applicability.
Finally, the Fund argues that Lin’s suggested interpretation of the CWMA would
lead to an absurd result. To adopt Lin’s position, the Fund contends, “would unreasonably
subject persons and businesses that occasionally hire those in the construction trades,
e.g., roofers, plumbers, HVAC installers and remodelers, to work on discrete projects to
administrative penalties and criminal sanctions under the CWMA.” Id. at 22. Beyond the
distinct penalties imposed by the CWMA, the Fund further explains that Lin’s
interpretation would subject private persons and non-construction businesses to a variety
of administrative and criminal sanctions for the failure to maintain workers’ compensation
insurance or to pay unemployment compensation taxes. See id. at 23. The Fund argues
that, because Lin’s interpretation would extend the CWMA to a broad range of contractual
relationships beyond those contemplated by the legislature, and because the application
[J-7-2018] - 12
of the Act to those relationships would result in severe, unintended consequences, this
Court must reject Lin’s approach.
“Generally, agency-level decisions—such as those of the WCJ and [the Board]
here—are to be affirmed on appeal so long as the essential findings are supported by
substantial evidence and there has been no constitutional violation, procedural
irregularity, or error of law.” IA Constr. Corp. v. W.C.A.B. (Rhodes), 139 A.3d 154, 158
(Pa. 2016) (citing 2 Pa.C.S. § 704; Leon E. Wintermyer, Inc. v. W.C.A.B. (Marlowe), 812
A.2d 478, 485 (Pa. 2002)). We defer to the factual findings of the WCJ, who, in the
workers’ compensation context, is the “ultimate finder of fact and the exclusive arbiter of
credibility and evidentiary weight.” Id. at 161 (quoting Daniels v. W.C.A.B. (Tristate
Transp.), 828 A.2d 1043, 1052 (Pa. 2003)).
However, our task in the instant case is primarily one of statutory interpretation, a
question of law as to which our standard of review is de novo and our scope of review is
plenary. See Thomas Jefferson Univ. Hosps., Inc. v. Pa. Dep’t of Labor & Indus., 162
A.3d 384, 389 (Pa. 2017). “In all matters involving statutory interpretation, we apply the
Statutory Construction Act, 1 Pa.C.S. §§ 1501, et seq., which directs us to ascertain and
effectuate the intent of the General Assembly.” Commonwealth v. Kingston, 143 A.3d
917, 922 (Pa. 2016) (citing 1 Pa.C.S. § 1921(a)).
In discerning that intent, the court first resorts to the language of the statute
itself. If the language of the statute clearly and unambiguously sets forth
the legislative intent, it is the duty of the court to apply that intent to the case
at hand and not look beyond the statutory language to ascertain its
meaning. See 1 Pa.C.S. § 1921(b) (“When the words of a statute are clear
and free from all ambiguity, the letter of it is not to be disregarded under the
pretext of pursuing its spirit.”). “Relatedly, it is well established that resort
to the rules of statutory construction is to be made only when there is an
ambiguity in the provision.” Oliver v. City of Pittsburgh, 11 A.3d 960, 965
(Pa. 2011).
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Thomas Jefferson Univ. Hosps., 162 A.3d at 389 (quoting Mohamed v. Commonwealth,
Dep’t of Transp., Bureau of Motor Vehicles, 40 A.3d 1186, 1192-93 (Pa. 2012)) (citation
modified).
In relevant part, the CWMA provides:
(a) General rule.--For purposes of workers’ compensation, unemployment
compensation and improper classification of employees provided herein, an
individual who performs services in the construction industry for
remuneration is an independent contractor only if:
(1) The individual has a written contract to perform such services.
(2) The individual is free from control or direction over performance
of such services both under the contract of service and in fact.
(3) As to such services, the individual is customarily engaged in an
independently established trade, occupation, profession or business.
* * *
(c) Factors not to be considered.--The failure to withhold Federal or State
income taxes or pay unemployment compensation contributions or workers’
compensation premiums with respect to an individual’s remuneration shall
not be considered in determining whether the individual is an independent
contractor for purposes of the Workers’ Compensation Act or the
Unemployment Compensation Law.
(d) Workers’ compensation.--
(1) An individual who is an independent contractor as determined
under this section is not an employee for purposes of the Workers’
Compensation Act. For purposes of this section, each employment
relationship shall be considered separately.
(2) Nothing in this act shall be construed to affect section 321(2) of
the Workers’ Compensation Act.
43 P.S. § 933.3.
In essence, the dispositive interpretive question is whether “an individual who
performs services in the construction industry for remuneration,” id. § 933.3(a), refers to
[J-7-2018] - 14
an individual who works for a construction business, or to an individual whose job duties
merely involve construction activities. As the Commonwealth Court noted, the CWMA
provides a definition for the term “construction,” but not for the term “industry” or the
phrase “construction industry.” See 43 P.S. § 933.2; supra n.7. As such, we interpret the
term “industry” according to its common and approved usage. See 1 Pa.C.S. § 1903(a).
In the relevant context, Webster’s Dictionary defines “industry” as “a department or
branch of a craft, art, business, or manufacture . . . [especially] one that employs a large
personnel and capital especially in manufacturing,” or “a group of productive or profit-
making enterprises.”8
In using the phrase “in the construction industry,” the CWMA appears to focus
upon the nature of a putative employer’s business, just as an individual employed by an
automobile manufacturer may be said to work “in the automobile industry.” However, the
overall structure of the clause in dispute classifies an individual by reference to the
services that the individual performs, not necessarily the specific business activities of the
putative employer. Consequently, we agree with the Commonwealth Court that the
clause “an individual who performs services in the construction industry” is ambiguous.
Accordingly, we employ the principles set forth in the Statutory Construction Act.
To resolve ambiguity in a statutory provision, we may consider:
(1) The occasion and necessity for the statute.
(2) The circumstances under which it was enacted.
(3) The mischief to be remedied.
(4) The object to be attained.
8 Industry, W EBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1155-56 (1971 ed.);
see also Industry, MERRIAM-W EBSTER ONLINE DICTIONARY, http://www.merriam-
webster.com/dictionary/industry (last visited May 21, 2018).
[J-7-2018] - 15
(5) The former law, if any, including other statutes upon the same or similar
subjects.
(6) The consequences of a particular interpretation.
(7) The contemporaneous legislative history.
(8) Legislative and administrative interpretations of such statute.
1 Pa.C.S. § 1921(c). Further, we must presume that “the General Assembly does not
intend a result that is absurd, impossible of execution or unreasonable.” 1 Pa.C.S.
§ 1922(1); see also Office of Admin. v. State Employees’ Ret. Bd., 180 A.3d 740, 753
(Pa. 2018).
With regard to the perceived need for the Act and the mischief that the General
Assembly sought to remedy, the legislature clearly intended to combat the deceptive
business practice of classifying employees as independent contractors so as to avoid the
expenses and responsibilities attending the employment relationship—a practice more
widespread in construction than in many other industries. Prominent commentators on
Pennsylvania’s workers’ compensation law have noted that, prior to the enactment of the
CWMA, as many as nine percent of Pennsylvania’s workers were misclassified as
independent contractors, and that one quarter of those misclassified workers were in the
construction industry. See DAVID B. TORREY & ANDREW E. GREENBERG, PENNSYLVANIA
WORKERS’ COMPENSATION § 2:9.10 (3d ed.). As the Fund highlights, in detailing the need
for the CWMA in the House of Representatives, Representative Lentz, a sponsor of the
legislation, explained:
It is widely recognized as a problem throughout the country and in particular
here in Pennsylvania. The United States Department of Labor estimates
that in the year 2000, approximately 30 percent of all construction firms
engaged in the practice of misclassifying employees, which is about three
times the misclassification rate in other industries.
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Some construction firms routinely classify their employees as “independent
contractors” for the specific purpose of avoiding the payment of decent
wages, health benefits, pensions, as well as Federal and State and local
employment taxes that other legitimate employers pay.
H.R. JOURNAL, No. 193D-33, at 743 (May 5, 2009).9 The problem that was identified
related to the practices of construction firms, suggesting that the CWMA was intended to
regulate those entities, not entities such as restaurants that undertake a remodeling
project.
The legislative history speaks still more directly to the present inquiry. In
discussing the details of the CWMA, Representative Lentz responded to a concern of one
of his colleagues that the Act would classify a homeowner who hires a contractor to work
on her home as an “employer.” Representative Lentz stated that, under the Act, “[a]n
employer is someone in the business of construction. That would not include a
homeowner that hires somebody to build a porch.” Id. at 755. This statement, too,
indicates that the CWMA was not intended to apply to relationships like the one at issue,
between a restaurant and an individual hired to perform remodeling services.
Our review of the contemporaneous legislative history finds further support in
materials issued by the Department in connection with its implementation and
enforcement of the CWMA. The Department’s CWMA complaint form requests the name
and contact information for the business suspected of a CWMA violation, and asks: “What
type of construction services does the business perform?”10 If the CWMA applied to all
9 Although statements made by legislators during the enactment process are not
dispositive of legislative intent, “they may properly be considered as part of the
contemporaneous legislative history.” Commonwealth v. Wilson, 602 A.2d 1290, 1294
n.4 (Pa. 1992).
10 PA DEP’T OF LABOR & INDUS., BUREAU OF LABOR LAW COMPLIANCE, CONSTRUCTION
WORKPLACE MISCLASSIFICATION COMPLAINT FORM, LLC-72 02-11, at 1,
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manner of construction activities without regard to the nature of the putative employer’s
business, as Lin would have us conclude, then this information would be immaterial to
the Department’s enforcement efforts. Further, in its annual report regarding its CWMA
enforcement activities in 2014, the Department included several reasons that it rejected
referrals and found no violation of the Act, including that “the employers were not in the
construction industry.”11 In that same report, the Department described the operation of
the CWMA as prohibiting “construction employers from classifying as independent
contractors workers who do not satisfy all of the definitional criteria of an independent
contractor.” 2014 Report, supra n.11, at 3 (emphasis added). Like the above-discussed
legislative history, this administrative guidance is not dispositive, but serves as one of the
numerous tools that a court may employ to interpret ambiguous statutory language. See
1 Pa.C.S. § 1921(c)(7)-(8).
We agree with the Fund that the above-discussed tools of statutory construction
support the Commonwealth Court’s interpretation. However, perhaps most importantly,
Lin’s interpretation of the CWMA leads to an absurd and unreasonable result. In the
instant case, the WCJ opined—and we agree—that the contractual relationship between
Lin and Eastern Taste was “essentially the same relationship that property owners
typically have with painters, plumbers, electricians, carpenters and other remodelers.”
WCJ Decision, 4/17/2013, at 4. If we were to accept Lin’s interpretation of the Act, then
http://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/act72/Documents/
LLC-72.pdf (last visited May 18, 2018).
11 KATHY MANDERINO, ACTING SECRETARY OF LABOR & INDUSTRY, ADMINISTRATION AND
ENFORCEMENT OF THE CONSTRUCTION W ORKPLACE MISCLASSIFICATION ACT IN 2014 (Mar. 1,
2015), at 13, http://www.dli.pa.gov/Individuals/Labor-Management-Relations/
Documents/Act%2072%20report%202014.pdf (last visited May 18, 2018) (hereinafter
“2014 Report”). Although the Department has continued to issue its required annual
report regarding its CMWA enforcement activities, its reports for the years after 2014 do
not detail specific reasons for the Department’s rejection of referrals. Thus, the
Department’s more recent reports are of lesser utility for purposes of the instant case.
[J-7-2018] - 18
the CWMA would apply to all of these contractual arrangements, so long as the
contemplated work involves some manner of construction activity. By Lin’s reasoning, if
a homeowner planned to remodel her kitchen, she would take on “the role of a general
contractor in the construction industry.” Brief for Lin at 13. Any individual whom she
might hire to complete that project, then, would be her “employee” unless the parties
satisfied the stringent requirements of 43 P.S. § 433.3(a)(1)-(3), even if both parties fully
understand the individual to be an independent contractor. At that point, should she fail
to classify that individual as an employee for purposes of workers’ compensation, and to
provide the required workers’ compensation coverage, then she would be subject to
criminal prosecution under the CWMA. See 43 P.S. §§ 933.4(a)(1), 933.5. The CWMA
would impose similar burdens under the Unemployment Compensation Law,12 and would
subject her to similar criminal penalties for her failure to comply with that law as well. See
43 P.S. §§ 933.4(a)(2), 933.5.
Further, under Lin’s interpretation, the consequences to that homeowner would
extend beyond the discrete penalties imposed by the CWMA. In specifying that the
classification of an independent contractor in the construction industry is to be made “[f]or
purposes of workers’ compensation [and] unemployment compensation,” 43 P.S.
§ 433.3(a), a manifest purpose of the CWMA was to subject putative employers within its
ambit to the requirements of the Workers’ Compensation Act and the Unemployment
Compensation Law. If the CWMA would classify a homeowner as an “employer” simply
by virtue of her decision to hire a kitchen remodeler, then she could be subject to
administrative and criminal penalties under those separate statutory schemes, in addition
to those set forth in the CWMA. For instance, under Section 305 of the Workers’
Compensation Act, she suddenly would be required to maintain workers’ compensation
12 43 P.S. §§ 751, et seq.
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insurance and, should she fail to do so, could be subject to criminal prosecution for a
misdemeanor or a felony. See 77 P.S. § 501(b) (providing that an employer who fails to
maintain workers’ compensation insurance shall, upon conviction, “be guilty of a
misdemeanor of the third degree,” or, for an intentional violation, “shall be guilty of a felony
of the third degree”).
We cannot assume that, in enacting the CWMA, the General Assembly intended,
sub silentio, to so drastically alter the scope of employment law in this Commonwealth,
or to attach such severe consequences to relatively ordinary contractual relationships,
such as the one at issue. Because we cannot countenance an absurd and unreasonable
result, 1 Pa.C.S. § 1922(1), we must reject Lin’s suggested interpretation of the CWMA.
Accordingly, we agree with the Commonwealth Court that, “when determining whether
the CWMA is applicable to the situation at hand, the construction activity must be
analyzed and considered in the context of the putative employer’s industry or business.”
Lin, 155 A.3d at 114. Specifically, in confining its applicability to individuals who perform
services “in the construction industry,” 43 P.S. § 933.3(a), the CWMA refers only to those
individuals who work for a business entity that performs construction services, namely
“[e]rection, reconstruction, demolition, alteration, modification, custom fabrication,
building, assembling, site preparation and repair work.” 43 P.S. § 933.2. Stated
otherwise, the CWMA is inapplicable where the putative employer is not in the business
of construction. Because “Eastern Taste is a restaurant, not a construction business,”
WCJ Decision, 4/17/2013, at 3, the CWMA does not preclude Lin’s classification as an
independent contractor. Accordingly, we find no error in the Commonwealth Court’s well-
reasoned opinion.13
13 Because our inquiry herein is confined to the applicability of the CWMA, we offer
no opinion regarding the Commonwealth Court’s separate determination that Lin failed to
establish that he was an employee under Section 104 of the Workers’ Compensation Act.
[J-7-2018] - 20
The order of the Commonwealth Court is affirmed.
Chief Justice Saylor and Justices Baer, Todd, Donohue, Dougherty and Mundy
join the opinion.
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