Workers' Compensation Alert: Predetermination/Misclassification in the Construction Industry


In Nate Holyoke Builders, Inc. et al. v. WCB AIU, WCB App. Div. No. 14-11 (April 24, 2014), the employer appealed a decision imposing a $30,000 penalty for misclassification of nine employees as independent contractors. The nine employees had been predetermined by the WCB to be independent contractors.

The Appellate Division affirmed, finding the workers were "employees" and that the employer was required to secure workers' compensation insurance, notwithstanding that the workers had been predetermined to be independent contractors. It vacated the portion of the decision imposing a penalty.

The Appellate Division found the provisions imposing civil penalties ambiguous with respect to the construction industry. It held the WCB should not subject an employer to a penalty for failing to recognize the legal status of the workers to be employees, given the "complicated legal analysis that was preliminarily determined in the employer's favor by the very agency later charged with making the ultimate determination."
This decision makes clear that workers' compensation insurance will be required in the event a predetermination finding of independent contractor status is later reversed. But an initial predetermination finding, even if later reversed, may serve to insulate against penalties for misclassification, at least in the construction industry.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© PretiFlaherty | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.