Senate Co-Sponsorship Memoranda

We are introducing legislation to expand and improve existing Worker Misclassification protections across many industries. This legislation is designed to protect workers and taxpayers. This legislature can act to make our Commonwealth a place where workers get paid for the labor they provide and taxpayers are guaranteed that our money isn’t used to exploit the labor of our neighbor
 
These updates and improvements are the result of two years of work by the Joint Task Force on Misclassification of Employees. The Joint Task Force was created by Act 85 of 2020.  Over the last two years, the joint task force composed of a bipartisan-nominated group of volunteers from business, labor, and government worked on the significant issues of worker misclassification. Their final report which was released on December 1, 2022 found:
 

• An estimated 48,939 employers annually misclassify at least one employee;
• 259,000 Pennsylvania workers are misclassified annually;
• The UC Trust Fund loses $91 million annually from worker misclassification;
• Worker Misclassification annually causes the PA General Fund to lose between $6.4-124.5 million in revenue.
• The Uninsured Employer Guaranty Fund (UEGF) lost $383,000 in 2021 due to misclassification.
• 10,892 misclassified employees suffered injury or illness at work and were denied Workers Compensation in 2021.
• The misclassified workers in 2021 who suffered injury or illness at work lost an estimated $153 million in benefits.

 
To address these significant issues that harm Pennsylvania workers, taxpayers, and law-abiding Pennsylvania businesses, the Worker Misclassification Task Force unanimously recommended the following changes to the worker misclassification law: 

1. Extend Act 72, the Construction Workplace Misclassification Act, beyond the construction trades to cover other industries.
2. Adopt a single, multi-factor test for the commonwealth to clearly delineate the difference between "employee" and "independent contractor."
3. Expand the statewide clearance programs to require all state agencies to pull current licenses or not renew current licenses if a business knowingly misclassified workers and has not paid the fines and fees associated with that violation or previous violations.
4. Require appropriate state agencies to share FEIN and employment information under proper confidential safeguards on all state agency business applications.
5. Enhance the penalties associated with worker misclassification violations.
6. Provide L&I with resources to hire additional investigative and support staff and with subpoena authority to acquire records of employers as part of investigations into misclassification.
7. Provide L&I with authority to issue administrative stop-work orders.
8. Provide L&I with statutory authority to debar companies or individuals for knowing violations or for multiple violations of Act 72.
9. Authorize liability to be imposed by law on general contractors any time their subcontractors are found to have misclassified workers.
10. Require labor brokers doing business in the commonwealth to be registered and bonded.
11. Create an interagency working group to meet quarterly to coordinate enforcement strategies involving state agencies, along with the Attorney General's Office and county District Attorneys' Offices.
12. Allocate funds and expand posting requirements for a statewide effort of education and public outreach to educate the public, workers, and business owners about the worker misclassification issue and the obligations under the law.
13. Authorize the Department of Revenue, the Bureau of Workers' Compensation, and the Bureau of Labor Law Compliance to share data for the purposes of investigating employee misclassification.
14. Authorize L&I to recover investigative costs and attorneys' fees from violators and authorize courts to assess investigative costs and attorneys' fees incurred by the Office of Attorney General and District Attorneys' Offices against criminal violators who are found guilty or plead guilty or nolo contendere for knowing violations.
15. Stronger Private Right of Action language so folks hurt by worker misclassification can sue for damages, lost wages, and other items.

 
 
 
The legislation we are introducing will include these 15 unanimous recommendations from the Joint Task Force on Worker Misclassification. The legislation will be a nearly identical companion to House Bill 2810 introduced by Reps. Galloway, McClinton, and Harkins last session.
 
For more information on the Joint Task Force on Worker Misclassification please click the following links:
 
Act-85-Final-Report.pdf (pa.gov)
 
Worker Misclassification Task Force Issues Final Report with 15 Unanimous Recommendations for General Assembly (pa.gov)
 
Please join us to protect workers from exploitation and ensure they get fair wages, benefits, and treatment from all Pennsylvania employers.