Trial Engrossment of Amendment A03473 to House Bill 1748 P.N. 2413, Regular Session 2023-2024

A03473

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1748

Session of

2023

INTRODUCED BY McNEILL, DALEY AND KRAJEWSKI, OCTOBER 13, 2023

AS REPORTED FROM COMMITTEE ON LABOR AND INDUSTRY, HOUSE OF

REPRESENTATIVES, AS AMENDED, DECEMBER 12, 2023

AN ACT

Providing for the registration of labor brokers; imposing duties

on the Department of Labor and Industry and the Secretary of

Labor and Industry; establishing the Labor Broker

Registration Account; and imposing penalties.

TABLE OF CONTENTS

Section 1. Short title.

Section 2. Definitions.

Section 3. Prohibition.

Section 4. Proof of registration.

Section 5. Verification system.

Section 6. Registration.

Section 7. Expiration and renewal.

Section 8. Certification of compliance.

Section 9. Reporting changes.

Section 10. Fees.

Section 11. Labor Broker Registration Account.

Section 12. Prohibited acts.

Section 13. Investigations.

Section 14. Penalties.

Section 15. Suspension of registration.

Section 16. Other relief.

Section 17. Regulations.

Section 18. Effective date.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the Labor Broker

Registration Act.

Section 2. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Account." The Labor Broker Registration Account established

under section 11.

"Construction." Erection, reconstruction, demolition,

alteration, modification, custom fabrication, building,

assembling, site preparation and repair work done on any real

property or premises under contract, whether or not the work is

for a public body and paid for from public funds.

"Debar." As follows:

(1) Action taken by the secretary to prohibit a

contractor, subcontractor or person from contracting with or

participating in contracts for public work for a period of at

least three years.

(2) The debarment shall include all divisions or other

organizational elements of a contractor or subcontractor

unless limited by its terms to specific divisions or

organizational elements.

(3) The debarment may apply to affiliates or other

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persons or entities associated with the contractor,

subcontractor or individual if they are specifically named

and given written notice of the debarment and an opportunity

to appeal.

(4) The debarment shall apply to a successor entity. An

entity shall be a successor entity if it:

(i) has one or more of the same principals or

officers as the employer against whom the order was

issued;

(ii) performs similar work within the same

geographical area;

(iii) occupies the same premises;

(iv) shares the same telephone number or facsimile

number;

(v) has the same email address or Internet website;

(vi) employs substantially the same workforce or

administrative employees, or both;

(vii) utilizes the same tools, equipment or

facilities;

(viii) employs or engages the services of any person

or persons involved in the direction or control of the

other; or

(ix) lists substantially the same work experience.

"Department." The Department of Labor and Industry of the

Commonwealth.

"Employee." As follows:

(1) An individual performing a service or labor for an

employer for wages, remuneration or other compensation.

(2) The term includes:

(i) In relation to workers' compensation, as the

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term "employe" is defined in section 104 of the Workers'

Compensation Act.

(ii) In relation to unemployment compensation, as

the term "employe" is defined in section 4(i) of the

Unemployment Compensation Law.

"Employer." As follows:

(1) A person, including an agent of the person, that

engages the services of an employee for wages, remuneration

or other compensation.

(2) The term includes:

(i) In relation to workers' compensation, as the

term "employer" is defined in section 103 of the Workers'

Compensation Act.

(ii) In relation to unemployment compensation, as

the term "employer" is defined in section 4(j) of the

Unemployment Compensation Law.

"Labor broker." As follows:

(1) An entity or individual that supplies construction

workers to an employer a contractor or subcontractor for the

performance of construction work or for a construction

project of the employer on a site in this Commonwealth in

exchange for compensation from the employer contractor or

subcontractor, provided that the completion of the project is

directed by the employer contractor or subcontractor and not

the entity or individual.

(2) The term does not include a construction

subcontractor that is responsible for and carries out all of

the following:

(i) Performing construction work on a project in

accordance with a written contract for a defined scope of

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construction work at a fixed price.

(ii) Obtaining necessary licenses or permits to

perform construction services under the entity's or

individual's name.

(iii) Exclusively controlling the work of any

subcontractor, including the authority to hire and fire

and to direct the methods and means of construction work

performed on the construction project.

(iv) Paying wages and fringe benefits to workers

through any subcontractor and not through any other

entity or individual and maintaining required employment

and payroll records by the subcontractor.

(v) Purchasing the majority of materials, supplies

and tools for construction work performed by the

subcontractor on the construction project.

(vi) Maintaining workers' compensation and

unemployment insurance coverage for periods preceding,

during and succeeding the terms of the construction

project for the type and scope of construction performed

by the subcontractor on the construction project.

(2) The term does not include:

(i) A subcontractor, if the subcontractor:

(A) has a written contract to perform services

for a contractor or another subcontractor and the

contract is project-specific and contains a

particular scope of work;

(B) is responsible for directing the methods and

means of construction work performed on the

construction project within the particular scope of

work of the subcontractor; and

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subcontractor to perform work on the construction

project in compliance with the act of October 13,

2010 (P.L.506, No.72), known as the Construction

Workplace Misclassification Act.

(ii) An individual or entity that refers

construction workers to a contractor or subcontractor if

the workers will be the employees of the contractor or

subcontractor.

"Person." An individual, firm, sole proprietorship,

partnership, corporation, association or other entity.

"Public body." Any of the following:

(1) The Commonwealth.

(2) A political subdivision, including a county, city,

borough, incorporated town, township or municipal authority,

of this Commonwealth.

(3) An authority created by the General Assembly.

(4) An instrumentality or agency of the Commonwealth.

(5) A school district of this Commonwealth.

"Secretary." The Secretary of Labor and Industry of the

Commonwealth or the authorized representative of the Secretary

of Labor and Industry of the Commonwealth.

"Subcontractor." As follows:

(1) A person, other than a natural person, regardless of

its tier, that performs construction work for a contractor or

another subcontractor under a contract.

(2) The term does not include a staffing agency that

supplies labor or persons that are material suppliers for a

project.

"Unemployment Compensation Law." The act of December 5, 1936

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(2nd Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment

Compensation Law.

"Workers' Compensation Act." The act of June 2, 1915

(P.L.736, No.338), known as the Workers' Compensation Act.

Section 3. Prohibition.

A person may not hold oneself out or engage in any act as a

labor broker without satisfying the registration requirements

under this act.

Section 4. Proof of registration.

A labor broker shall include the labor broker's registration

number issued by the department in all advertisements

distributed within this Commonwealth and on all contracts,

estimates and related documents created after the effective date

of this section.

Section 5. Verification system.

The department shall develop and maintain a list of completed

registrations under this act on the department's publicly

accessible Internet website, which shall include each labor

broker's legal business name, any assumed business name,

business address, verification number and verification

expiration date.

Section 6. Registration.

(a) Application.--A labor broker shall apply, in writing or

electronically, for registration in a manner and on a form

prescribed by the department.

(b) Contents.--The registration form shall include the

following information:

(1) For any individual, sole proprietor, primary owner

or officer of a business entity, all of the following

information:

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(i) The applicant's full legal name and title at the

applicant's business.

(ii) The applicant's business address and telephone

number.

(iii) The applicant's Federal identification number

or Federal tax identification number used for business

purposes.

(iv) All prior business names and addresses of the

applicant.

(v) A statement whether:

(A) the applicant, even in doing so as part of a

business entity application, has ever been convicted

of, or pleaded guilty or no contest to, a criminal

offense related to fraud, theft, a crime of

deception, a crime involving fraudulent business

practices or employee misclassification;

(B) the applicant, even if doing so as part of a

business entity application, has ever been found to

have misclassified employees as independent

contractors by the department, any other state or

political subdivision or the United States Department

of Labor; and

certificate or license issued by any other state or

political subdivision has ever been revoked or

suspended pursuant to an order issued by a court of

competent jurisdiction and, if so, the current status

of the certification or similar certificate or

license. The statement required by this clause shall

include the same information with respect to any

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other business in which the applicant has or has ever

had an interest.

(2) The legal business name, any assumed business name,

designated business address, physical address, telephone

number and email address of the applicant.

(3) For an out-of-State business entity, the legal

business name, any assumed business name, designated business

address, physical address, telephone number and email address

of the applicant and any identification number issued to the

applicant by the applicant's state or political subdivision

through registration, licensing or verification systems, if

applicable.

(4) For any individual, sole proprietor, primary owner

or officer, including a chief executive officer, chief

financial officer, chief operating officer or an equivalent

officer, of a business entity, the name of all other persons

with an ownership interest in the applicant that are not

identified under paragraph (1). This paragraph does not apply

to shareholders with less than a 5% ownership interest in a

publicly traded corporation.

(5) A description of the nature of the business of the

applicant.

(6) Whether the applicant has been suspended or debarred

within the last 10 years.

(7) Proof of financial responsibility, which may include

liability insurance or bonding, or self-insurance.

(8) The fee specified under section 10.

(9) A signed statement by the applicant that the

information in the application is true and accurate and any

individual signing the application is an authorized agent of

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the applicant subject to the penalties under 18 Pa.C.S.

§ 4904 (relating to unsworn falsification to authorities).

Section 7. Expiration and renewal.

(a) Dates.--The registration shall be completed on a fixed,

biennial basis on a date determined by the department.

(b) Acceptance.--The department shall accept an application

for a registration renewal before the expiration of an active

registration in a time frame specified by the department.

Section 8. Certification of compliance.

After a labor broker completes an application for

registration or registration renewal under this act and pays the

fee specified under section 10, the department shall issue a

certificate of compliance to the labor broker that includes a

registration number.

Section 9. Reporting changes.

A labor broker shall update its registration within 30 days

of any change in personal or business information required to be

provided to the department under this act.

Section 10. Fees.

(a) Amount.--An applicant for registration or registration

renewal under this act shall pay an application fee of not more

than $300 to the department.

(b) Deposit.--Fees under subsection (a) shall be deposited

into the account.

Section 11. Labor Broker Registration Account.

(a) Establishment.--The Labor Broker Registration Account is

established as a restricted revenue, interest-bearing account in

the General Fund.

(b) Deposit.--The department shall deposit fees and

penalties collected under this act into the account.

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on the money are appropriated on a continuing basis to the

department for administering and enforcing the provisions of

this act.

Section 12. Prohibited acts.

(a) Specific prohibitions.--On or after the effective date

of this subsection, a person who holds oneself out or engages in

any act as a labor broker may not do any of the following:

(1) Fail to complete the registration as a labor broker

as required under this act.

(2) Fail to display or identify its registration number

as required under section 4.

(3) Knowingly make a false statement in the application

for labor broker registration.

(4) Knowingly contract with or perform work as a labor

broker for another person:

(i) without first completing the registration

required under this act; or

(ii) after the registration required under this act

has expired or has been suspended.

(5) Knowingly contract with or pay another person for

work as a labor broker if:

(i) the person has not completed the registration

required under this act; or

(ii) the person's registration required under this

act has expired or has been suspended.

(b) Verification.--A person seeking to contract or engage

with a purported labor broker shall verify the registration of

the purported labor broker using the verification system

described in section 5.

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(1) A person, including an agent of a person, may not

contract with or engage the services of an unregistered labor

broker.

(2) A person found to have engaged with an unregistered

labor broker shall be subject to penalties described under

section 14.

Section 13. Investigations.

(a) Authorization.--If the secretary receives information

indicating that a person has violated this act, the secretary

may investigate the matter.

(b) Permitted actions.--The secretary may take any of the

following actions:

(1) Enter and inspect a worksite or place of business at

any reasonable time to examine and inspect records that

relate to the compliance of this act.

(2) Subpoena witnesses, administer oaths, examine

witnesses and copy or compel the production of records,

contracts and other documents that are necessary and

appropriate to the enforcement of this act.

(3) Petition Commonwealth Court to enforce any subpoena

or order issued by the department under this act.

Section 14. Penalties.

The following penalties apply:

(1) A person that violates section 12(a)(1) or (2) shall

be subject to the following:

(i) For a first violation, the department shall

issue a warning letter to the person detailing the

omission and provide 30 days to correct the violation.

(ii) For a second or subsequent violation, the

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department shall bring an administrative action to assess

a fine of up to $2,500 for each day that the labor broker

is not registered.

(2) For a violation of section 12(a)(3), (4) or (5), the

department shall bring an administrative action to assess a

fine of up to $10,000 per violation.

(3) A person that violates section 12(b) or (c) shall be

subject to the following:

(i) For a first violation, the department shall

issue a fine of no more than $25,000.

(ii) For a second or any subsequent violations, the

department shall issue a fine not to exceed $25,000 per

day per worker provided by the unregistered labor broker.

(4) The secretary may debar a person that violates any

of the provisions of section 12.

(4) THE SECRETARY MAY DEBAR OR PROHIBIT A PERSON FROM

REGISTERING AS A LABOR BROKER THAT VIOLATES ANY OF THE

PROVISIONS OF SECTION 12.

(5) THE SECRETARY SHALL WAIVE A PENALTY FOR A VIOLATION

OF SECTION 12(A)(5), (B) OR (C) BY A PERSON IF THE PERSON OR

EMPLOYER IS ABLE TO PROVIDE EVIDENCE TO THE SECRETARY OF A

GOOD FAITH EFFORT TO COMPLY WITH THIS ACT. THE SECRETARY

SHALL DETERMINE THAT A PERSON HAS PROVIDED EVIDENCE OF A GOOD

FAITH EFFORT UNDER THIS PARAGRAPH IF THE PERSON CAN PROVE TO

THE DEPARTMENT THAT THE PERSON VERIFIED THE REGISTRATION OF A

LABOR BROKER UNDER SECTION 5 AND THE LABOR BROKER WAS

REGISTERED IN ACCORDANCE WITH THIS ACT AT THE TIME OF THE

VERIFICATION.

Section 15. Suspension of registration.

(a) Reasons.--The secretary may suspend a labor broker's

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registration for failing to comply with an investigation under

section 13, failing to pay penalties imposed in accordance with

section 14 or otherwise failing to correct a violation as

required by section 14.

(b) Appeal.--A suspension under subsection (a) shall be

subject to appeal of the administrative action.

Section 16. Other relief.

In addition to the penalties specified under this act, the

department may seek other relief, including injunctive relief

and costs, reasonable attorney fees and investigation costs.

Section 17. Regulations.

The department may promulgate regulations as necessary to

implement this act.

Section 18. Effective date.

This act shall take effect in one year.

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