The Pennsylvania Supreme Court recently decided a case in which it examined the mechanics lien law, and parsed the definition of “subcontractor”, in order to determine if union workers were protected by the state’s mechanics lien scheme.
PA Union Workers Employees, Not Subcontractors
While the opinion in Bricklayers of Western Pennsylvania Combined Funds, Inc. v. Scott’s Development Co. and Laborers’ Combined Funds of Western Pennsylvania, et al., v. Scott’s Development Company is lengthy, it boils down to the determination of one specific question: whether union workers are employees of the general contractor, or whether they are subcontractors. At first blush, this may not appear to be a very important distinction, but given the specific wording of the Pennsylvania mechanics lien laws, the determination between employee and subcontractor determines whether the claimant is entitled to the protection of a mechanics lien.
Pennsylvania mechanics lien law, 49 P.S. §1303(a), specifically states that “[n]o lien shall be allowed in favor of any person other than a contractor or subcontractor, as defined herein, even though such person furnishes labor or materials to an improvement.” Consequently, a lien claimant must fit into the statutory definition of either “contractor” or “subcontractor” in order to have the right to claim a valid mechanics lien pursuant to Pennsylvania law. Since the union workers were clearly not original contractors, they would need to meet the “subcontractor” definition in order to be allowed to file mechanics liens against the property. According to the Pennsylvania mechanics lien act, a subcontractor is:
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one who, by contract with the contractor, or pursuant to a contract with a subcontractor in direct privity of a contract with a contractor, express or implied, erects, constructs, alters or repairs an improvement or any part thereof; or furnishes labor, skill or superintendence thereto; or supplies or hauls materials, fixtures, machinery or equipment reasonably necessary for and actually used therein; or any or all of the foregoing, whether as superintendent, builder or materialman. The term does not include an architect or engineer who contracts with a contractor or subcontractor, or a person who contracts with a materialman or a person who contracts with a subcontractor not in direct privity of a contract with a contractor.
Much of the discussion in the opinion concerned the balancing of the relatively strict definitions contained in the statute with the general view that since mechanics lien rights are to provide protection, that the statutes governing their use should be be liberally construed. Unfortunately for the union workers in this case, their collective bargaining agreement specifically defined the workers as “employees” of the contractor, requiring the contractor/employer to provide benefits such as health and retirement benefits for the hours worked by the union workers. Given that information, the union had to rely on a broad reading of the statute and an alternate view of the agreements between the contractor and the unions. While a discussion of implied vs. express contracts, broad vs. strict statutory interpretation, and whether the agreements between the contractor and the union were specific contracts related to a project or were mere obligations as to which parties they needed to hire as subcontractors, is not necessary for our purposes here, this decision outlines an important point in Pennsylvania mechanics lien law.
In the words of the Pennsylvania Supreme Court, “[a]lthough the 1963 Act is intended to protect subcontractors who suffer harm occasioned by the primary contractor’s failure to meet its obligations, we have determined that the Legislature did not intend the term “subcontractor” to subsume employees of the primary contractor.”
And, unless the legislature specifically revisits these provisions, employees of an original contractor are not protected by Pennsylvania mechanics lien law.