This Post is based upon our experience in litigating independent contractor cases before many Pennsylvania Unemployment Hearing Referees, and also upon knowledge we have accumulated over the years in briefing independent contractor issues to the Unemployment Compensation Board of Review, as well as to state and federal courts in Pennsylvania.
Click Here for our most comprehensive Post on Independent Contractor law, which can affect a person's right not only to Unemployment Benefits, but to Workers' Compensation, Family Leave, Disability pay, Vacation Pay, Sick Leave, Overtime and protection under State and Federal Anti-discrimination Statutes.
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| What am I? Fuzzy on Your True Nature? |
NOTE: If you have received an Independent Contractor Questionnaire from the Pennsylvania 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 TRULY an "independent contractor" or if you are self-employed.
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.
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| Does Not Make its So Independent Contractor Agreements Are Not Worth the Paper They Are Written on if You Are a "True Employee" |
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.
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:
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| This is Being Free From Direction and Control |
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.If you are seeking unemployment after losing a job in which you were deemed an independent contractor, the issue is initially decided by the Unemployment Service Center via a Notice of Financial Determination (which will indicate you have zero earnings).
If the issue arises after you are already on unemployment (i.e. because you took a part-time job paying you on a 1099 basis), the Service Center will issue you a Notice of Determination.
HERE ARE SOME OTHER ARTICLES YOU MAY FIND WORTHWHILE: Misclassification of Employees as Independent Contractors and 1099 Workers in Pennsylvania
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