We recently discussed the Pennsylvania Supreme Court’s decision 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 Companyin which it was held that union workers, by virtue of their collective bargaining agreement, were to be classified as employees of the general contractor rather than as subcontractors. Since 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”, the determination that the union employees were not subcontractors extinguished their ability to file valid mechanics liens.

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Recent Pennsylvania Supreme Court Decision

In the recent case, the Pennsylvania Supreme Court, stated that, “[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.” In coming to the decision, the court noted that the Pennsylvania legislature must have had a reason to limit the ability to file a valid mechanics lien to “contractors” and “subcontractors” at the expense of other persons who “furnish labor or materials to an improvement”, and allowing employees of a general contractor to file valid liens, would be changing the the intent of the legislature’s specific language. Indeed, the court specifically mentioned that “it would be improper to endorse such a change absent legislation that more clearly evinces that intent” [emphasis added], leaving the door open for the Pennsylvania legislature to address this issue if desired.

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Pennsylvania Legislature May Consider Altering the Statutory Language At Issue

Almost immediately after the decision in Scott’s Development Co., Rep. William Keller, D-Philadelphia introduced a bill that would alter the lien law landscape as it currently stands and is understood by the Pennsylvania Supreme Court. Representative Keller said that his “legislation will amend the Mechanics’ Lien Law to ensure that benefit funds covered by the Employee Retirement Income Security Act of 1974 and related federal laws are considered subcontractors and afforded rights and remedies under the law.”

A significant factor in the court’s decision in determining that the union workers were employees of the general, rather than subcontractors, was that the collective bargaining agreement provided that the workers be treated as employees of the GC in terms of receiving health and retirement benefits for  the hours worked. In reconsidering whether the union trustees qualify as subcontractors, the legislature has the opportunity to allow mechanics lien protection to these parties without stripping them of the protections they have gained through the collective bargaining agreements. It is not unusual for union trustees to qualify for lien protection in other states, and their specific inclusion in Pennsylvania may result in more payment fairness in the Keystone State.