Changes in the Workers' Compensation Act for the Construction Industry
April 04, 2010
New legislation creates new class of independent contractors
In 2009, the Legislature enacted changes to the Workers' Compensation Act that created a new class of independent contractors called "Construction Subcontractors. "Those changes took effect on January 1, 2010. In response to the changes, the Workers' Compensation Board adopted a new application for predetermination as a Construction Subcontractor. The application required the signature of both the contractor hiring the subcontractor and the subcontractor. It was only applicable to a single contract, required lists of other projects and contractors for whom the subcontractor worked and, most objectionable, copies of the subcontractor's tax returns for previous years. Many in the construction industry believed that the application went well beyond the letter and intent of the legislation and pressed the Legislature for relief.The Legislature responded and passed LD 1815, "An Act to Clarify the Construction Subcontractor Status of the Maine Workers' Compensation Act of 1992," as emergency legislation on March 25, 2010. LD 1815 was signed by the Governor on March 30, 2010 and took effect immediately.
The new law will greatly simplify the process for applying for a predetermination as a Construction Subcontractor and the Workers' Compensation Board has already issued a new application for predetermination as a Construction Subcontractor. Unlike the old application, the new application need only be completed by the subcontractor, is good for a year, can be used with multiple contractors, does not require lists of projects or other contractors for which the subcontractor has worked, and eliminates the need to provide copies of tax returns.The new application form is available.
While the recent changes make the predetermination process less onerous, they do not change the substance of the law.A predetermination creates a presumption that a person is a Construction Subcontractor, but does not prevent a Construction Subcontractor from filing a Workers' Compensation claim if he or she is injured on the job.The presumption can be rebutted if it is shown that the person requesting the predetermination does not, in fact, meet the definition of a Construction Subcontractor established by law.Contractors who rely on predeterminations of a Construction Subcontractor's status should carefully review the statutory test, which is included with the application form, to ensure that their subcontractors are not employees. Contractors should also be aware that a worker could qualify as a Construction Subcontractor under the Workers' Compensation Act, but still be classified as an employee under Unemployment Insurance or federal or state tax laws.
For more information, please contact David Pierson in our Brunswick office.
This alert information is provided for general information, and is not substitute for legal or other professional advice.
