The Pennsylvania Supreme Court issued a ruling last week that narrows independent contractor classification under state unemployment law.
Pennsylvania’s Unemployment Compensation Law defines a worker as an employee unless the individual is free from direction or control and “is customarily engaged in an independently established trade, occupation, profession or business.”
In A Special Touch v. UC Tax Services, the court was asked to determine the meaning of “customarily engaged.”
The case involved a salon that, following an audit, was found to have misclassified 10 workers as independent contractors and was assessed more than $10,000 in unpaid unemployment contributions and fines.
On appeal, three of the workers were found to meet the threshold for independent contractor classification. Of the remaining seven, the status of five was appealed through to the Supreme Court. While the workers were determined to have been free of control, thus meeting the first prong in the state’s requirement, at issue before the court was the meaning of “customarily engaged” in the second prong.
The court ruled that the phrase “customarily engaged” as used in the second prong of the law requires that an individual actually be involved in an independently established trade, occupation, profession or business — as opposed to having the ability to be involved.