Hiring independent contractors is a growing practice for many businesses, allowing them to take on work larger in scope without all of the associated costs involved in hiring full-time employees — including the expense of workers' compensation insurance.
However, the use of independent contractors may also lead to the unforeseen risk for businesses of being deemed an uninsured employer or statutory employer under the Pennsylvania Workers' Compensation Act (the act), which can expose businesses to significant expense and criminal prosecution under the act, as well as liability under the Construction Workplace Misclassification Act (CWMA). Similarly, insured out-of-state employers may be uninsured for their Pennsylvania employees' claims if their out-of-state policies do not provide coverage for Pennsylvania claims.
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