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Senate Bill 1056 − Improvements to the Construction Worker Misclassification Act

The construction industry is filled with hardworking people. These individuals work every day from sunrise to sunset to build our homes, offices, hospitals, roads, and other critical infrastructure. This industry supplies over 230,000 jobs and has an economic impact of over $1 billion in Pennsylvania, according to the U.S. Bureau of Labor Statistics. Construction jobs should be good, family-sustaining jobs with benefits to Pennsylvanians; however, some contractors intentionally misclassify construction workers as independent contractors.

This misclassification cheats workers out of salaries, benefits, and important worker protections like unemployment and workers compensation. Misclassified workers do not qualify for sick pay. Misclassified workers are not guaranteed paid time off. Misclassified workers are not protected by OSHA. Despite completing the exact same work, misclassified workers receive many fewer protections than their correctly-classified peers. 

Misclassification also cheats Pennsylvania taxpayers of revenue. Keystone Research Center estimates that misclassification of construction employees in Pennsylvania deprives the Commonwealth of $83M in worker compensation premiums, $47M in state income taxes, and $11M in unemployment compensation taxes.

To address this issue, the General Assembly passed Act 72 of 2010, the Construction Workplace Misclassification Act. This legislation prohibits employers from misclassifying workers as independent contractors, using several data points to determine if a worker is an employee or independent contractor. From 2011- 2014 the act was rarely enforced. Since 2015, enforcement has increased — 777 employers have been found in violation of Act 72, and the Department of Labor and Industry has levied $2.39 million in fines. Earlier this year, the Delaware County District Attorney and the Attorney General of Pennsylvania filed the first criminal charges under Act 72 of 2010 against a dry wall contractor. 

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