DEPARTMENT OF LABOR AND INDUSTRY, UNINSURED EMPLOYERS GUARANTY FUND
WORKERS' COMPENSATION APPEAL BOARD (LIN AND EASTERN TASTE) APPEAL OF: FU XIANG LIN
ARGUED: March 6, 2018
from the Order of Commonwealth Court entered on February 17,
2017 at No. 627 CD 2016 reversing the order entered on March
23, 2016 by the Workers' Compensation Appeal Board at No.
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
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.
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 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.
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"). 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.
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 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
b. [Lin] was hired to do remodeling before the restaurant had
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
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.
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. Accordingly, the WCJ concluded that Lin
failed to prove that he was an employee of Eastern Taste,
and, thus, that Lin was ineligible for workers'
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' 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). 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.
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.
appealed the WCJ's order to the Workers' Compensation
Appeal Board ("Board"). On January 6, 2015, the
Board reversed, concluding that Lin's employment 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.
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. The Board obliged on March 23, 2016, and
the Fund appealed the Board's order to the Commonwealth
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
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)).
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
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 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.").
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 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.
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, " 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, Webster's Third New International
Dictionary 1155 (2002)).
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).
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).
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, "turning every individual and business choosing
to undertake any remodeling project into an employer 'in
the construction industry.'" Id. at 114. In