Construction Employment Law
New Arizona Independent Contractor Law Is of Little Value to Contractors, Subs
In passing a law that formalizes independent contractor status, the Legislature made it largely irrelevant to Arizona’s construction industry.
A new, well-publicized state law that
went into effect August 6, 2016, provides guidelines for creating
a lawful independent contractor relationship. Unfortunately, the recently
A.R.S. § 23-1601 generally
excludes licensed contractors and subcontractors.
The statute provides guidelines for
companies in other industries to create a “rebuttable presumption”
of a lawful independent contractor relationship, by, among other
things, having a worker complete a “Declaration of Independent
Business Status.” But Subsection C provides that the statute does
not apply to general contractors and subcontractors unless they are
“contracting with an independent contractor to perform services that
do not require a license pursuant to [A.R.S.] Title 32, Chapter 10,”
which governs contractors.
This means that generals and subs are likely
able to use the newly created “Declaration of Independent Business
Status” only to create the presumption of independent contractor
relationships with workers that do not actually perform construction
work (e.g., office workers and support staff, circumstances
When considering whether to hire a
construction worker as an independent contractor, contractors and
subs should instead consider the guidelines and requirements
explained in the Arizona Registrar of Contractors (ROC)
Substantive Policy Statement 102. They should also be mindful
that a construction worker hired as an independent contractor must
be properly licensed by the ROC.