Independent Contractor Rule Under Pennsylvania Unemployment Law

Unemployment Attorney Representing Only Employees With Offices in Paoli, King of Prussia, Plymouth Meeting, Exton, Radnor and Philadelphia

This Blog is based upon my experience in litigating independent contractor cases before many Unemployment Hearing Referees, and also upon knowledge I have accumulated over the years in briefing independent contractor issues to the Unemployment Compensation Board of Review.

NOTE:  If you have received a Questionnaire from the Service Center, you may, after you have read this Post, want to Click Here to jump to our Post on how to complete such a Questionnaire.  Tricky business, indeed.

Can I Get Unemployment If I Am an Independent Contractor in Pennsylvania?

One cannot get unemployment in Pennsylvania if one is an "independent contractor." This may be important in either of the following contexts: 1) you lose your “independent contractor” job and file for unemployment benefits (if you are found to be a true independent contractor you will be denied benefits); or, 2) you are presently getting unemployment benefits and earn money on a “part-time” basis as an “independent contractor” (in which case you will be disqualified from getting benefits due to your “self-employed” status).

NOTE:  The below analysis in general does not apply to people employed by temporary employment agencies on a 1099 basis.  Click Here for analysis of such situations.

I Signed a Contract Saying I am an Independent Contractor - Is That the End of the Story?

Many people who have contracts that say they are "independent contractors " are not independent contractors (labels do not control - if I call a donkey a racehorse, it is still a donkey).  Rather, there is a fact-based test that is applied to determine your employment status.

The mere fact that you have signed an agreement saying you are an independent contractor, or are paid wages via a 1099, does not automatically mean you are an independent contractor (i.e. self-employed). Rather, you will be deemed to be truly self-employed only if you are free from direction and control while performing your work AND if you in fact are regularly engaged in an independently established trade, occupation or business.

Click Here to read our extensive analysis of the distinction between independent contractors and employees, and what you can do if you have been "misclassified."

What Is the Fact-Based Test for Determining if I am an Independent Contractor Under PA Unemployment Law?

Pursuant to Section 4(l)(2)(B) of the unemployment law, you are an independent contractor if:

1. You are free from control or direction over the performance of the services involved.  That means that by and large your work is completely unsupervised.  No one tells you what to do, how to do it, when to do it, etc.  If you do your work from home, that is a strong indicator that you are an independent contractor (but it is not dispositive), and;

2. You are customarily engaged in an independently established trade, occupation, profession or business.    The things to look for?  Do you advertise?  Do you rent office space?  Have you incorporated?  Do you subcontract some of the work you get?  Do you work for more than one employer? 

So, even if you work free from direction and control (i.e. work at home without regular supervision) and are thus a "true" independent contractor, you may still be entitled to unemployment benefits if you do not operate an established business.

Who Decides if I am an Independent Contractor

The above 2 prong legal test is heavily fact-driven, and there are many nuances. The issue is initially decided by the Unemployment Service Center via a Notice of Determination.  If there is an appeal from an NOD, the issue is then decided by a Pennsylvania Unemployment Referee at an Unemployment Hearing. 

Unemployment Lawyer Serving Individuals in Locations Such as Springfield, Malvern, Reading, Norristown, Media, West Chester, Doylestown, Ambler, Phoenixville, Downingtown, Lansdale and Surrounding Areas

If you have an upcoming hearing before an Unemployment Referee in Reading, Springfield, Malvern, Norristown, Bristol or Philadelphia, you will want to seriously consider hiring counsel to assist you. There is a lot at stake, and the evidentiary and legal issues associated with an independent contractor case are often complex, indeed.

MORE QUESTIONS?

Want more information about unemployment law in Pennsylvania?

Click Here to review our answers to the most common FAQs concerning Pennsylvania Unemployment, check out our Website or call us at 610-647-5027.  We also have some YouTube Videos that explain some unemployment law issues as well (just click the YouTube Badge at the top of this page).

Best of luck, John A. Gallagher, Esquire.

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