Alert: Maine Supreme Court Addresses Employee Misclassification and Workers' Compensation Coverage Requirements

In WCB Abuse Investigation Unit v. Nate Holyoke Builders, Inc., 2015 ME 99 (August 4, 2015), a construction company obtained predeterminations of independent contractor status from the WCB for workers classified as independent contractors. Holyoke had workers’ compensation insurance coverage.

Following an audit, the Maine Workers’ Compensation Board alleged that Holyoke's contractors were employees and that it had failed to secure workers’ compensation coverage for its employees. A Hearing Officer determined that Holyoke had misclassified as independent contractors nine workers and assessed a $30,000 civil penalty.

The Law Court held that the Act “does not require an employer to correctly classify workers for payroll purposes and to pay workers’ compensation premiums based on those classifications.” Because Holyoke had workers' compensation insurance to cover employees injured  on the job, it was in compliance with the coverage requirements of the Act. The Law Court vacated the penalty and the finding that Holyoke had violated the coverage requirements of the Act.