Credit: Tom Sofield/LevittownNow.com
The message was clear Wednesday morning: the use of the misuse of independent contractor status for workers mainly in the construction industry is creating a burden for taxpayers in Pennsylvania.
Democratic State Rep. John Galloway and State Rep. Perry Warren held a press conference in Levittown to push changes to cut down on the misclassification of workers as independent contractors. The effort is aimed at protecting workers, making employers take responsibility, and protect jobs.
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“A whole cottage industry has emerged to teach people how to break laws and misclassify workers as independent contractors,” Galloway said. “By taking advantage of loopholes, employers deliberately cut labor costs, pay fewer tax dollars and avoid paying our working people a fair day’s wage for a fair day’s work.
Galloway, a Democrat from Falls Township, said there are existing rules on the books but employers take advantage of “loopholes so big you could drive a Mack truck through.”
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Warren stated if construction workers who are being misidentified as independent contractors get hurt the taxpayer often are stuck with picking up the tab instead of the company that they were working for at the time. That would be different if the laborer was classified as an employee.
“Pennsylvania may be losing $200 million or more a year in federal income taxes in this illegal practice. What we’re talking about is money: More than anything else this is a revenue bill. We’re talking about recouping hundreds of millions of dollars lost every single year,” Galloway said.
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Warren said if employers were paying their fair share, the state would see a recurring revenue source.
The misclassiciation of workers is estimated to cost as much as $200 million to the General Fund, Workmen’s Compensation Administration Fund, and Unemployment Compensation
Trust Fund. Galloway and Warren said the state could put money toward other uses instead of covering for employers who classify workers.
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So far, legislation to create a bipartisan task force to examine the issue, enforcement of existing laws, and to propose additional solutions has received support in the Pennsylvania House of Representatives but stalled in the Senate. It passed the House 198-0.
“House Bill 716 passed unanimously in the House of Representatives; however, it has not yet passed in the Senate. And we need to bring attention to this bill and make sure it gets to the finish line and becomes law in Pennsylvania,” said Warren, a Democrat from Newtown Borough.
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Bryan Allen, the chief of staff for Democratic State Rep. Tina Davis, said the lawmaker from Bristol Township is offering “strong support” for efforts to fix the misclassification problem.
State Sen. Steve Santarsiero, a Democrat, also offered his support through legislative aide Amy Masgay.
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Kevin Morrow, a union carpenter, has been working with Galloway on the legislation for the last five years.
