Dep't of Labor & Indus. v. Workers' Comp. Appeal Bd.

[J-7-2018]
IN THE SUPREME COURT OF PENNSYLVANIA
EASTERN DISTRICT

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

DEPARTMENT OF LABOR AND : No. 27 EAP 2017
INDUSTRY, UNINSURED EMPLOYERS :
GUARANTY FUND : Appeal from the Order of
: Commonwealth Court entered on
: February 17, 2017 at No. 627 CD
v. : 2016 reversing the order entered on
: March 23, 2016 by the Workers’
: Compensation Appeal Board at No.
WORKERS’ COMPENSATION APPEAL : A15-1320.
BOARD (LIN AND EASTERN TASTE) :
: ARGUED: March 6, 2018
:
APPEAL OF: FU XIANG LIN :

OPINION

JUSTICE WECHT DECIDED: June 26, 2018
In this appeal, we consider whether an individual contracted to perform renovations

for a restaurant falls within the Construction Workplace Misclassification Act (“CWMA” or

“the Act”), 43 P.S. §§ 933.1-933.17, such that he may be eligible for compensation under

the Workers’ Compensation Act.1 The Commonwealth Court determined that the CWMA

is inapplicable under these circumstances, that the claimant otherwise failed to establish

that he was an employee of the restaurant, and that he accordingly is ineligible for

workers’ compensation benefits. We affirm the order of the Commonwealth Court.

The material facts are undisputed. On February 21, 2011, Fu Xiang Lin began

performing remodeling work for Eastern Taste, a restaurant that had not yet opened for

1 Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2708.
business. Lin and three other individuals were hired by Lin’s sister-in-law, Sai Zheng

Zheng, who was the owner of Eastern Taste. They did not sign a written contract, but Lin

was to be paid for his services on a per diem basis. Zheng’s husband, Kond Bin Wang,

oversaw the project. Wang told Lin what sort of work needed to be done, but he did not

direct Lin’s specific activities because Lin was a seasoned remodeler. Lin had worked in

remodeling for fifteen years, and he was the most experienced individual involved in the

project. Although Wang purchased the materials necessary for the project, Lin brought

and used his own tools. Lin was hired only to complete the remodeling work, and he was

not expected to work at the restaurant after it opened.

On March 28, 2011, while repairing a chimney, Lin fell from a beam and landed on

a cement floor, suffering serious injuries. In addition to numerous bone fractures, the

impact caused trauma to Lin’s spinal cord, rendering him paraplegic. On December 22,

2011, Lin filed a workers’ compensation claim petition against Eastern Taste. On

February 27, 2012, because Eastern Taste did not maintain workers’ compensation

insurance, Lin additionally filed a petition for benefits from the Uninsured Employers

Guaranty Fund (the “Fund”).2 Both Eastern Taste and the Fund filed answers denying,

inter alia, the existence of an employment relationship. Lin’s claim petitions were

consolidated and assigned to Workers’ Compensation Judge Bruce Doman (the “WCJ”)

for disposition.

At a hearing before the WCJ on April 27, 2012, Lin testified on his own behalf.

Eastern Taste presented the testimony of Wang and Gheng Renkuar, another individual

2 The Fund, as prescribed by statute, exists “for the exclusive purpose of paying to
any claimant or his dependents workers’ compensation benefits due and payable . . . and
any costs specifically associated therewith where the employer liable for the payments
failed to insure or self-insure its workers’ compensation liability . . . at the time the injuries
took place.” 77 P.S. § 2702(c). If an injured employee’s claim “is not voluntarily accepted
as compensable, the employee may file a claim petition naming both the employer and
the fund as defendants.” 77 P.S. § 2704.

[J-7-2018] - 2
who worked on the remodeling project. Based upon the testimony, the WCJ concluded

that the “critical facts in this matter are essentially undisputed,” and made the following

findings:

a. Eastern Taste is a restaurant, not a construction business.

b. [Lin] was hired to do remodeling before the restaurant had ever opened.

c. The most experienced person on the job in the construction business
was [Lin].

d. The owner’s husband was in charge of what needed to be done.

e. [Lin] was paid on a per diem basis to do it along with three others.

f. [Lin] used his own tools and van. The owner’s husband provided tools
and materials as well.

WCJ Decision, 4/17/2013, at 3. The WCJ further found that Lin’s work was not conducted

“in the regular course” of Eastern Taste’s business, and that Lin’s “employment was

casual in character.” Id.3 Accordingly, the WCJ concluded that Lin failed to prove that he

was an employee4 of Eastern Taste, and, thus, that Lin was ineligible for workers’

compensation benefits.

Nonetheless, the WCJ recognized that “the result would be entirely different” if the

CWMA applied. Id. at 4. In relevant part, the CWMA prohibits the “improper classification

of employees” as independent contractors so as to avoid liability for workers’

3 As the Commonwealth Court later noted, although the WCJ characterized these
latter determinations as findings of fact, they more accurately are classified as
conclusions of law.
4 Section 104 of the Workers’ Compensation Act defines employees as “[a]ll natural
persons who perform services for another for a valuable consideration,” but excludes from
the definition “persons whose employment is casual in character and not in the regular
course of the business of the employer.” 77 P.S. § 22.

[J-7-2018] - 3
compensation benefits, and provides that “an individual who performs services in the

construction industry for remuneration” may be classified as an independent contractor

only if certain conditions are met. 43 P.S. § 933.3(a).5 The WCJ concluded that the

CWMA was inapplicable to Eastern Taste because it “is a restaurant in the restaurant

business and not in the construction business.” WCJ Decision, 4/17/2013, at 4.

With regard to the relationship between Wang and Lin, the WCJ observed that

Wang merely informed Lin what tasks he wanted to be completed, and it was Lin’s job to

do them. The WCJ opined that “[t]his is essentially the same relationship that property

owners typically have with painters, plumbers, electricians, carpenters and other

remodelers. These specialists bring their time and expertise.” Id. Essentially, the WCJ

concluded that, although these types of contractual relationships may involve construction

activities, the individual who hires such a specialist is not “in the construction industry” for

purposes of the CWMA. Because the CWMA was inapplicable, the WCJ determined that

Lin’s classification as an independent contractor rather than an employee was not

improper under 43 P.S. § 933.3. Accordingly, the WCJ entered an order denying Lin’s

claim petitions.

Lin appealed the WCJ’s order to the Workers’ Compensation Appeal Board

(“Board”). On January 6, 2015, the Board reversed, concluding that Lin’s employment

5 Specifically, for purposes of the CWMA, an “individual who performs services in
the construction industry for remuneration” may be classified as an independent
contractor only if:
(1) The individual has a written contract to perform such services.
(2) The individual is free from control or direction over performance of such
services both under the contract of service and in fact.
(3) As to such services, the individual is customarily engaged in an
independently established trade, occupation, profession or business.
43 P.S. § 933.3(a).

[J-7-2018] - 4
was not “casual” in nature, and that Lin was an employee of Eastern Taste for purposes

of workers’ compensation. However, because the Board based its decision upon the

general definition of an employee under the Workers’ Compensation Act, it did not

consider the applicability of the CWMA. The Board remanded to the WCJ to make any

necessary findings and to enter an award of compensation. On October 28, 2015, in

accordance with the Board’s order, the WCJ made additional findings regarding the extent

of Lin’s injuries, wages, and litigation costs, then entered an order granting Lin’s claim

petition against Eastern Taste, with the Fund secondarily liable for the payment of

compensation.

The Fund appealed the WCJ’s order to the Board. However, because the Board

previously had considered the dispositive legal issue, the Fund merely sought to make

the Board’s earlier order final for purposes of appeal to the Commonwealth Court.6 The

Board obliged on March 23, 2016, and the Fund appealed the Board’s order to the

Commonwealth Court.

On February 17, 2017, the Commonwealth Court reversed the Board’s order,

holding that Lin is ineligible for workers’ compensation benefits. Dep’t of Labor & Indus.,

Uninsured Emp’rs Guar. Fund v. W.C.A.B. (Lin & Eastern Taste), 155 A.3d 103 (Pa.

Cmwlth. 2017). As was the case before the WCJ and the Board, the dispositive question

was whether Lin was an employee of Eastern Taste or an independent contractor.

Because independent contractors cannot recover workers’ compensation benefits, the

Commonwealth Court noted, “[w]hether one’s status is that of an employee or

6 See Shuster v. W.C.A.B. (Pa. Human Relations Comm’n), 745 A.2d 1282, 1287
(Pa. Cmwlth. 2000) (“[N]o matter whether a party appeals the Board’s decision . . . or the
WCJ’s decision . . . he or she is required to follow the normal procedure to appeal a WCJ
decision which is to file an appeal with the Board within 20 days after notice of that
decision has been received. The party can then file a motion with the Board requesting
that the Board make its previous order final.”) (citation omitted).

[J-7-2018] - 5
independent contractor ‘is a crucial threshold determination that must be made before

granting workers’ compensation benefits.’” Id. at 109 (quoting Universal Am-Can, Ltd. v.

W.C.A.B. (Minteer), 762 A.2d 328, 330 (Pa. 2000)).

The Commonwealth Court first reviewed the Board’s stated bases for reversal of

the WCJ’s decision and determined that the Board relied upon facts that were inconsistent

with the WCJ’s findings. Stressing that the WCJ’s findings of fact are binding upon the

Board if supported by substantial evidence, the Commonwealth Court observed that the

Board “exceeded its authority by making ‘findings,’ which, at a minimum, went beyond

those made by the WCJ.” Id. Because the WCJ’s findings were supported by substantial

evidence, the court concluded that “the Board engaged in impermissible fact-finding and

then relied on those ‘facts’ to support its conclusion that [Lin] was an employee.” Id. In

other words, “[t]he Board did not base its legal conclusion on the facts as found by the

WCJ, and that was error.” Id. (emphasis in original).

After rejecting the Board’s “findings” and confining its inquiry to the facts as found

by the WCJ, the Commonwealth Court analyzed whether those facts supported the

conclusion that Lin was an employee of Eastern Taste, as opposed to an independent

contractor. To resolve that question, the Commonwealth Court relied upon the

multifactorial inquiry that this Court set forth in Universal Am-Can, which directs a court

to consider:

Control of manner work is to be done; responsibility for result only; terms of
agreement between the parties; the nature of the work or occupation; skill
required for performance; whether one is engaged in a distinct occupation
or business; which party supplied the tools; whether payment is by the time
or by the job; whether work is part of the regular business of the employer,
and also the right to terminate the employment at any time.

Id. at 110 (quoting Universal Am-Can, 762 A.2d at 333). The Commonwealth Court

stressed the WCJ’s finding that Wang was “in charge of what needed to be done,” but

[J-7-2018] - 6
that he “did not control the manner in which the work was to be completed.” Id. The court

reiterated the WCJ’s comparison to the contractual relationship between property owners

and “painters, plumbers, electricians, carpenters and other remodelers,” who have the

status of independent contractors, not employees. Id. The court noted that Eastern Taste

is a restaurant, not a construction business, and that Lin was hired to perform remodeling

work, not to work in the restaurant when it opened. Lastly, the Commonwealth Court

found significance in Lin’s use of his own tools. Because these factors tended to

demonstrate that Lin was an independent contractor, the Commonwealth Court found no

error in the WCJ’s original determination that Lin failed to satisfy his burden of proof to

establish an employer/employee relationship. Id. at 110-11; see Universal Am-Can, 762

A.2d at 330 (“It is a claimant’s burden to establish an employer/employee relationship in

order to receive benefits.”).

Having rejected the Board’s conclusion that Lin was an employee of Eastern Taste

under Section 104 of the Workers’ Compensation Act pursuant to the Universal Am-Can

framework, the Commonwealth Court turned to the separate inquiry of whether Lin may

be deemed an employee pursuant to the CWMA. Noting that this was a question of first

impression, the Commonwealth Court observed that, as a general matter, “[t]he CWMA

concerns the construction industry and affects the determination of who is an independent

contractor versus an employee” for purposes of workers’ compensation. Lin, 155 A.3d at

111. Although Section 2 of the CWMA, 43 P.S. § 933.2, incorporates the definitions of

“employer” and “employee” used in Sections 103 and 104 of the Workers’ Compensation

Act, 77 P.S. §§ 21, 22, the CWMA sets forth distinct criteria that must be satisfied before

an “individual who performs services in the construction industry for remuneration” may

be classified as an independent contractor for purposes of workers’ compensation. See

43 P.S. § 933.3(a). The Commonwealth Court observed that, “[i]f a worker falls within the

[J-7-2018] - 7
purview of the CWMA and does not meet the requirements to be considered an

independent contractor under the CWMA, then that individual will be deemed to be an

employee for purposes of workers’ compensation.” Lin, 155 A.3d at 111.

The Commonwealth Court noted that the operative language of the CWMA

restricts the application of the Act to services performed “in the construction industry.” 43

P.S. § 933.3(a). Thus, the court reasoned, whether the Act applies to a given individual

depends upon the correct interpretation of this phrase. Noting that the CWMA defines

the term “construction,”7 but provides no definition for the term “industry,” the

Commonwealth Court concluded that the latter term must be construed according to its

common and approved usage. Lin, 155 A.3d at 112 (citing 1 Pa.C.S. § 1903(a)). The

court observed that “[t]he term ‘industry’ is commonly defined as ‘skill, employment

involving skill’ and ‘a department or branch of a craft, art, business or manufacture.’” Id.

(quoting Industry, W EBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1155 (2002)).

Lin argued that the CWMA applied to his relationship with Eastern Taste because

the Act does not specify a primary business purpose of the employer as a prerequisite to

its applicability; Eastern Taste had not yet opened for business and was engaged only in

construction activities at the time of his injury; and, by undertaking the remodeling project,

Eastern Taste essentially took on the role of a general contractor in the construction

industry. The Commonwealth Court elected to give Lin the “benefit of the doubt that

arguably, the meaning of the phrase ‘in the construction industry’ is ambiguous,” and thus,

the court turned to the rules of statutory construction in order to ascertain the intent of the

General Assembly in drafting the CWMA. Id; see 1 Pa.C.S. § 1921(c).

7 The CWMA defines “construction” as “[e]rection, reconstruction, demolition,
alteration, modification, custom fabrication, building, assembling, site preparation and
repair work done on any real property or premises under contract, whether or not the work
is for a public body and paid for from public funds.” 43 P.S. § 933.2.

[J-7-2018] - 8
 Pursuant to the canons of statutory construction, the Commonwealth Court

consulted the legislative history of the CWMA, as well as the manner in which the

Pennsylvania Department of Labor and Industry (“Department”) has interpreted and

applied the Act. See 1 Pa.C.S. § 1921(c)(7)-(8). The court noted that, during debates in

the Pennsylvania House of Representatives, Representative Brian Lentz, a sponsor of

the bill that would become the CWMA, stated that “[s]ome construction firms routinely

classify their employees as ‘independent contractors’ for the specific purpose of avoiding

the payment of decent wages, health benefits, pensions, as well as Federal and State

and local employment taxes that other legitimate employers pay.” Lin, 155 A.3d at 112

n.17 (quoting H.R. JOURNAL, No. 193D-33, at 743 (May 5, 2009)) (emphasis added). The

court further relied upon an annual report issued by the Department’s Secretary in 2015,

which detailed the Department’s enforcement of the Act during 2014. Notably, the

Department provided explanations for instances in which the Department found no

violation of the CWMA, which included determinations that the employers in question

were not in the construction industry. Id. at 113. Moreover, the Department’s standard

complaint form for the reporting of alleged CWMA violations asks complainants to identify

the type of construction services that the putative employer performs. Id. The

Commonwealth Court accordingly concluded that both the legislative history of the

CWMA and administrative guidance from the Department suggest that “it is the character

and context of the putative employer that is determinative” of the applicability of the

CWMA. Id. (emphasis added).

Finally, the Commonwealth Court noted that courts must “presume that the

General Assembly did not intend a result that is absurd or unreasonable.” Id.; see 1

Pa.C.S. § 1922(1). Under Lin’s suggested interpretation of the CWMA, the court

reasoned, the Act would apply to contractual relationships far beyond its intended reach,

[J-7-2018] - 9
“turning every individual and business choosing to undertake any remodeling project into

an employer ‘in the construction industry.’” Id. at 114. In the court’s view, this would be

an absurd and unreasonable result, rendering Lin’s interpretation of the Act untenable.

The Commonwealth Court concluded that, “when determining whether the CWMA

is applicable to the situation at hand, the construction activity must be analyzed and

considered in the context of the putative employer’s industry or business.” Id. Returning

to the WCJ’s decision in the instant case, the Commonwealth Court agreed that the

CWMA is inapplicable because Eastern Taste was “a restaurant business and not a

construction business,” and, as such, was not “in the construction industry.” Id.

Consequently, the Commonwealth Court found no error in the WCJ’s decision, and it

reversed the Board’s contrary order.

Lin filed a petition for allowance of appeal, which we granted in order to consider

the following question:

Whether the Commonwealth Court’s decision interpreting the language of
the Construction Workplace Misclassification Act (CWMA) to mean that the
CWMA only applies to circumstances where the putative employer’s
industry or business is construction was in error?

Dep’t of Labor & Indus., Uninsured Emp’rs Guar. Fund v. W.C.A.B. (Lin & Eastern Taste),

170 A.3d 1006 (Pa. 2017) (per curiam).

Before this Court, Lin reiterates the arguments that he advanced before the

Commonwealth Court. He argues that the applicability of the CWMA turns upon the

nature of the work performed, not the employer’s business purpose. Lin notes that the

Act “makes no such distinctions as to what the primary business purpose of the employer

may be,” nor does it “state that the business industry of the employer controls whether

the [A]ct applies.” Brief for Lin at 13. Instead, Lin argues, the CWMA focuses upon “the

services being performed by the individual.” Id. Lin further notes that Eastern Taste was

[J-7-2018] - 10
not yet operating as a restaurant when he sustained his injuries, so the “only operation of

Eastern Taste at the time of the accident was restaurant construction.” Id. Because

Eastern Taste elected to undertake the remodeling project, Lin argues that “they in

essence took on the role of a general contractor in the construction industry.” Id. Thus,

Lin argues that he was performing “services in the construction industry for remuneration”

and that, because his relationship with Eastern Taste did not satisfy the express statutory

criteria provided in 43 P.S. § 933.3(a)(1)-(3), he could not be classified as an independent

contractor for purposes of workers’ compensation.

The Fund argues that the Commonwealth Court correctly identified the threshold

inquiry that controls the applicability of the CWMA, namely whether the putative

employer’s “industry or business is construction.” Brief for Fund at 11. The Fund

suggests that this interpretation is commanded by the Act’s plain language. Even if the

language of 43 P.S. § 433.3(a) is ambiguous, however, the Fund contends that the

Commonwealth Court correctly employed the principles of statutory construction to

ascertain the General Assembly’s intent.

The Fund notes that the CWMA “was enacted to address a prevalent problem in

the construction industry where construction businesses would misclassify employees as

independent contractors in order to avoid paying expenses such as unemployment

compensation taxes and workers’ compensation premiums.” Id. at 14. Like the

Commonwealth Court, the Fund points to statements of legislators who were considering

the bill that became the CWMA, and notes that their focus was upon abuses by

“construction firms” and employers “in the construction industry.” Id. at 14-17. The Fund

notes that debates in the Pennsylvania House of Representatives specifically addressed

whether the Act would apply to homeowners who hire a contractor for home renovations,

and that Representative Lentz, a sponsor of the bill, asserted that it would not. Id. at 16

[J-7-2018] - 11
(citing H.R. JOURNAL, No. 193D-33, at 755 (May 5, 2009)). According to the Fund, this

legislative history makes clear that the CWMA was directed at “construction businesses,

i.e., putative employers who sell and perform construction services, not, as [Lin] argues,

any person or business not in the construction business that hires someone on a limited

basis to undertake a remodeling project.” Id. at 17.

The Fund further relies upon the administrative materials that the Commonwealth

Court cited, including the Department’s CWMA complaint form and its 2014 annual report

of CWMA enforcement activities. Id. at 20-21. The Fund observes that the CWMA

complaint form requires the complainant to specify the type of construction services that

the putative employer performs, and that the Department rejects enforcement referrals

where that employer is not in the construction industry. The Fund argues that we should

defer to the Department’s treatment of the nature of the putative employer’s business as

dispositive of the CWMA’s applicability.

Finally, the Fund argues that Lin’s suggested interpretation of the CWMA would

lead to an absurd result. To adopt Lin’s position, the Fund contends, “would unreasonably

subject persons and businesses that occasionally hire those in the construction trades,

e.g., roofers, plumbers, HVAC installers and remodelers, to work on discrete projects to

administrative penalties and criminal sanctions under the CWMA.” Id. at 22. Beyond the

distinct penalties imposed by the CWMA, the Fund further explains that Lin’s

interpretation would subject private persons and non-construction businesses to a variety

of administrative and criminal sanctions for the failure to maintain workers’ compensation

insurance or to pay unemployment compensation taxes. See id. at 23. The Fund argues

that, because Lin’s interpretation would extend the CWMA to a broad range of contractual

relationships beyond those contemplated by the legislature, and because the application

[J-7-2018] - 12
of the Act to those relationships would result in severe, unintended consequences, this

Court must reject Lin’s approach.

“Generally, agency-level decisions—such as those of the WCJ and [the Board]

here—are to be affirmed on appeal so long as the essential findings are supported by

substantial evidence and there has been no constitutional violation, procedural

irregularity, or error of law.” IA Constr. Corp. v. W.C.A.B. (Rhodes), 139 A.3d 154, 158

(Pa. 2016) (citing 2 Pa.C.S. § 704; Leon E. Wintermyer, Inc. v. W.C.A.B. (Marlowe), 812

A.2d 478, 485 (Pa. 2002)). We defer to the factual findings of the WCJ, who, in the

workers’ compensation context, is the “ultimate finder of fact and the exclusive arbiter of

credibility and evidentiary weight.” Id. at 161 (quoting Daniels v. W.C.A.B. (Tristate

Transp.), 828 A.2d 1043, 1052 (Pa. 2003)).

However, our task in the instant case is primarily one of statutory interpretation, a

question of law as to which our standard of review is de novo and our scope of review is

plenary. See Thomas Jefferson Univ. Hosps., Inc. v. Pa. Dep’t of Labor & Indus., 162

A.3d 384, 389 (Pa. 2017). “In all matters involving statutory interpretation, we apply the

Statutory Construction Act, 1 Pa.C.S. §§ 1501, et seq., which directs us to ascertain and

effectuate the intent of the General Assembly.” Commonwealth v. Kingston, 143 A.3d

917, 922 (Pa. 2016) (citing 1 Pa.C.S. § 1921(a)).

In discerning that intent, the court first resorts to the language of the statute
itself. If the language of the statute clearly and unambiguously sets forth
the legislative intent, it is the duty of the court to apply that intent to the case
at hand and not look beyond the statutory language to ascertain its
meaning. See 1 Pa.C.S. § 1921(b) (“When the words of a statute are clear
and free from all ambiguity, the letter of it is not to be disregarded under the
pretext of pursuing its spirit.”). “Relatedly, it is well established that resort
to the rules of statutory construction is to be made only when there is an
ambiguity in the provision.” Oliver v. City of Pittsburgh, 11 A.3d 960, 965
(Pa. 2011).

[J-7-2018] - 13
Thomas Jefferson Univ. Hosps., 162 A.3d at 389 (quoting Mohamed v. Commonwealth,

Dep’t of Transp., Bureau of Motor Vehicles, 40 A.3d 1186, 1192-93 (Pa. 2012)) (citation

modified).

In relevant part, the CWMA provides:

(a) General rule.--For purposes of workers’ compensation, unemployment
compensation and improper classification of employees provided herein, an
individual who performs services in the construction industry for
remuneration is an independent contractor only if:

(1) The individual has a written contract to perform such services.

(2) The individual is free from control or direction over performance
of such services both under the contract of service and in fact.

(3) As to such services, the individual is customarily engaged in an
independently established trade, occupation, profession or business.

* * *

(c) Factors not to be considered.--The failure to withhold Federal or State
income taxes or pay unemployment compensation contributions or workers’
compensation premiums with respect to an individual’s remuneration shall
not be considered in determining whether the individual is an independent
contractor for purposes of the Workers’ Compensation Act or the
Unemployment Compensation Law.

(d) Workers’ compensation.--

(1) An individual who is an independent contractor as determined
under this section is not an employee for purposes of the Workers’
Compensation Act. For purposes of this section, each employment
relationship shall be considered separately.

(2) Nothing in this act shall be construed to affect section 321(2) of
the Workers’ Compensation Act.

43 P.S. § 933.3.

In essence, the dispositive interpretive question is whether “an individual who

performs services in the construction industry for remuneration,” id. § 933.3(a), refers to

[J-7-2018] - 14
an individual who works for a construction business, or to an individual whose job duties

merely involve construction activities. As the Commonwealth Court noted, the CWMA

provides a definition for the term “construction,” but not for the term “industry” or the

phrase “construction industry.” See 43 P.S. § 933.2; supra n.7. As such, we interpret the

term “industry” according to its common and approved usage. See 1 Pa.C.S. § 1903(a).

In the relevant context, Webster’s Dictionary defines “industry” as “a department or

branch of a craft, art, business, or manufacture . . . [especially] one that employs a large

personnel and capital especially in manufacturing,” or “a group of productive or profit-

making enterprises.”8

In using the phrase “in the construction industry,” the CWMA appears to focus

upon the nature of a putative employer’s business, just as an individual employed by an

automobile manufacturer may be said to work “in the automobile industry.” However, the

overall structure of the clause in dispute classifies an individual by reference to the

services that the individual performs, not necessarily the specific business activities of the

putative employer. Consequently, we agree with the Commonwealth Court that the

clause “an individual who performs services in the construction industry” is ambiguous.

Accordingly, we employ the principles set forth in the Statutory Construction Act.

To resolve ambiguity in a statutory provision, we may consider:

(1) The occasion and necessity for the statute.

(2) The circumstances under which it was enacted.

(3) The mischief to be remedied.

(4) The object to be attained.

8 Industry, W EBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1155-56 (1971 ed.);
see also Industry, MERRIAM-W EBSTER ONLINE DICTIONARY, http://www.merriam-
webster.com/dictionary/industry (last visited May 21, 2018).

[J-7-2018] - 15
 (5) The former law, if any, including other statutes upon the same or similar
subjects.

(6) The consequences of a particular interpretation.

(7) The contemporaneous legislative history.

(8) Legislative and administrative interpretations of such statute.

1 Pa.C.S. § 1921(c). Further, we must presume that “the General Assembly does not

intend a result that is absurd, impossible of execution or unreasonable.” 1 Pa.C.S.

§ 1922(1); see also Office of Admin. v. State Employees’ Ret. Bd., 180 A.3d 740, 753

(Pa. 2018).

With regard to the perceived need for the Act and the mischief that the General

Assembly sought to remedy, the legislature clearly intended to combat the deceptive

business practice of classifying employees as independent contractors so as to avoid the

expenses and responsibilities attending the employment relationship—a practice more

widespread in construction than in many other industries. Prominent commentators on

Pennsylvania’s workers’ compensation law have noted that, prior to the enactment of the

CWMA, as many as nine percent of Pennsylvania’s workers were misclassified as

independent contractors, and that one quarter of those misclassified workers were in the

construction industry. See DAVID B. TORREY & ANDREW E. GREENBERG, PENNSYLVANIA

WORKERS’ COMPENSATION § 2:9.10 (3d ed.). As the Fund highlights, in detailing the need

for the CWMA in the House of Representatives, Representative Lentz, a sponsor of the

legislation, explained:

It is widely recognized as a problem throughout the country and in particular
here in Pennsylvania. The United States Department of Labor estimates
that in the year 2000, approximately 30 percent of all construction firms
engaged in the practice of misclassifying employees, which is about three
times the misclassification rate in other industries.

[J-7-2018] - 16
 Some construction firms routinely classify their employees as “independent
contractors” for the specific purpose of avoiding the payment of decent
wages, health benefits, pensions, as well as Federal and State and local
employment taxes that other legitimate employers pay.

H.R. JOURNAL, No. 193D-33, at 743 (May 5, 2009).9 The problem that was identified

related to the practices of construction firms, suggesting that the CWMA was intended to

regulate those entities, not entities such as restaurants that undertake a remodeling

project.

The legislative history speaks still more directly to the present inquiry. In

discussing the details of the CWMA, Representative Lentz responded to a concern of one

of his colleagues that the Act would classify a homeowner who hires a contractor to work

on her home as an “employer.” Representative Lentz stated that, under the Act, “[a]n

employer is someone in the business of construction. That would not include a

homeowner that hires somebody to build a porch.” Id. at 755. This statement, too,

indicates that the CWMA was not intended to apply to relationships like the one at issue,

between a restaurant and an individual hired to perform remodeling services.

Our review of the contemporaneous legislative history finds further support in

materials issued by the Department in connection with its implementation and

enforcement of the CWMA. The Department’s CWMA complaint form requests the name

and contact information for the business suspected of a CWMA violation, and asks: “What

type of construction services does the business perform?”10 If the CWMA applied to all

9 Although statements made by legislators during the enactment process are not
dispositive of legislative intent, “they may properly be considered as part of the
contemporaneous legislative history.” Commonwealth v. Wilson, 602 A.2d 1290, 1294
n.4 (Pa. 1992).
10 PA DEP’T OF LABOR & INDUS., BUREAU OF LABOR LAW COMPLIANCE, CONSTRUCTION
WORKPLACE MISCLASSIFICATION COMPLAINT FORM, LLC-72 02-11, at 1,

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manner of construction activities without regard to the nature of the putative employer’s

business, as Lin would have us conclude, then this information would be immaterial to

the Department’s enforcement efforts. Further, in its annual report regarding its CWMA

enforcement activities in 2014, the Department included several reasons that it rejected

referrals and found no violation of the Act, including that “the employers were not in the

construction industry.”11 In that same report, the Department described the operation of

the CWMA as prohibiting “construction employers from classifying as independent

contractors workers who do not satisfy all of the definitional criteria of an independent

contractor.” 2014 Report, supra n.11, at 3 (emphasis added). Like the above-discussed

legislative history, this administrative guidance is not dispositive, but serves as one of the

numerous tools that a court may employ to interpret ambiguous statutory language. See

1 Pa.C.S. § 1921(c)(7)-(8).

We agree with the Fund that the above-discussed tools of statutory construction

support the Commonwealth Court’s interpretation. However, perhaps most importantly,

Lin’s interpretation of the CWMA leads to an absurd and unreasonable result. In the

instant case, the WCJ opined—and we agree—that the contractual relationship between

Lin and Eastern Taste was “essentially the same relationship that property owners

typically have with painters, plumbers, electricians, carpenters and other remodelers.”

WCJ Decision, 4/17/2013, at 4. If we were to accept Lin’s interpretation of the Act, then

http://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/act72/Documents/
LLC-72.pdf (last visited May 18, 2018).
11 KATHY MANDERINO, ACTING SECRETARY OF LABOR & INDUSTRY, ADMINISTRATION AND
ENFORCEMENT OF THE CONSTRUCTION W ORKPLACE MISCLASSIFICATION ACT IN 2014 (Mar. 1,
2015), at 13, http://www.dli.pa.gov/Individuals/Labor-Management-Relations/
Documents/Act%2072%20report%202014.pdf (last visited May 18, 2018) (hereinafter
“2014 Report”). Although the Department has continued to issue its required annual
report regarding its CMWA enforcement activities, its reports for the years after 2014 do
not detail specific reasons for the Department’s rejection of referrals. Thus, the
Department’s more recent reports are of lesser utility for purposes of the instant case.

[J-7-2018] - 18
the CWMA would apply to all of these contractual arrangements, so long as the

contemplated work involves some manner of construction activity. By Lin’s reasoning, if

a homeowner planned to remodel her kitchen, she would take on “the role of a general

contractor in the construction industry.” Brief for Lin at 13. Any individual whom she

might hire to complete that project, then, would be her “employee” unless the parties

satisfied the stringent requirements of 43 P.S. § 433.3(a)(1)-(3), even if both parties fully

understand the individual to be an independent contractor. At that point, should she fail

to classify that individual as an employee for purposes of workers’ compensation, and to

provide the required workers’ compensation coverage, then she would be subject to

criminal prosecution under the CWMA. See 43 P.S. §§ 933.4(a)(1), 933.5. The CWMA

would impose similar burdens under the Unemployment Compensation Law,12 and would

subject her to similar criminal penalties for her failure to comply with that law as well. See

43 P.S. §§ 933.4(a)(2), 933.5.

Further, under Lin’s interpretation, the consequences to that homeowner would

extend beyond the discrete penalties imposed by the CWMA. In specifying that the

classification of an independent contractor in the construction industry is to be made “[f]or

purposes of workers’ compensation [and] unemployment compensation,” 43 P.S.

§ 433.3(a), a manifest purpose of the CWMA was to subject putative employers within its

ambit to the requirements of the Workers’ Compensation Act and the Unemployment

Compensation Law. If the CWMA would classify a homeowner as an “employer” simply

by virtue of her decision to hire a kitchen remodeler, then she could be subject to

administrative and criminal penalties under those separate statutory schemes, in addition

to those set forth in the CWMA. For instance, under Section 305 of the Workers’

Compensation Act, she suddenly would be required to maintain workers’ compensation

12 43 P.S. §§ 751, et seq.

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insurance and, should she fail to do so, could be subject to criminal prosecution for a

misdemeanor or a felony. See 77 P.S. § 501(b) (providing that an employer who fails to

maintain workers’ compensation insurance shall, upon conviction, “be guilty of a

misdemeanor of the third degree,” or, for an intentional violation, “shall be guilty of a felony

of the third degree”).

We cannot assume that, in enacting the CWMA, the General Assembly intended,

sub silentio, to so drastically alter the scope of employment law in this Commonwealth,

or to attach such severe consequences to relatively ordinary contractual relationships,

such as the one at issue. Because we cannot countenance an absurd and unreasonable

result, 1 Pa.C.S. § 1922(1), we must reject Lin’s suggested interpretation of the CWMA.

Accordingly, we agree with the Commonwealth Court that, “when determining whether

the CWMA is applicable to the situation at hand, the construction activity must be

analyzed and considered in the context of the putative employer’s industry or business.”

Lin, 155 A.3d at 114. Specifically, in confining its applicability to individuals who perform

services “in the construction industry,” 43 P.S. § 933.3(a), the CWMA refers only to those

individuals who work for a business entity that performs construction services, namely

“[e]rection, reconstruction, demolition, alteration, modification, custom fabrication,

building, assembling, site preparation and repair work.” 43 P.S. § 933.2. Stated

otherwise, the CWMA is inapplicable where the putative employer is not in the business

of construction. Because “Eastern Taste is a restaurant, not a construction business,”

WCJ Decision, 4/17/2013, at 3, the CWMA does not preclude Lin’s classification as an

independent contractor. Accordingly, we find no error in the Commonwealth Court’s well-

reasoned opinion.13

13 Because our inquiry herein is confined to the applicability of the CWMA, we offer
no opinion regarding the Commonwealth Court’s separate determination that Lin failed to
establish that he was an employee under Section 104 of the Workers’ Compensation Act.

[J-7-2018] - 20
 The order of the Commonwealth Court is affirmed.

Chief Justice Saylor and Justices Baer, Todd, Donohue, Dougherty and Mundy

join the opinion.

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