Credit: Tom Sofield/LevittownNow.com
A local state representative’s bill that would establish a joint agency task force to address the misclassification of employees in Pennsylvania is headed to the governor.
House Bill 716, which was sponsored by Democratic State Rep. John Galloway, of Falls Township, and would create a joint agency task force to address the misclassification of employees in Pennsylvania.
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The bill easily passed the House and Senate.
The legislation would change the Administrative Code of 1929 to establish the Joint Agency Task Force on the Misclassification of Employees. Members of the task force would include Pennsylvania’s attorney general; secretary of labor and industry, who would chair the task force; and the secretary of revenue, in addition to people with experience in an industry affected by misclassification (four total with one appointed by each general assembly caucus).
The duties of the task force would include looking at Pennsylvania’s classification and enforcement system and make recommendations to strengthen enforcement, as well as educate employers and the public about employee classification.
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When the bill was announced, lawmakers said construction workers who are misidentified as independent contractors and get hurt on the job lead to taxpayers often getting stuck with picking up the tab instead of the company that they were working for at the time. That would not happen if the laborer was classified as an employee.
The misclassification of workers is estimated to cost $200 million or more a year in federal income taxes, $10 million in unemployment taxes, $15 million in income tax revenues, and as much as $83 million in workers compensation premiums in the state. Workers are estimated to lose $6,000 per year in overtime pay, according to the state representative’s office.
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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 people a fair day’s wage for a fair day’s work.
“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 that businesses that follow the law are impacted by those that do not and misclassify workers.
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A dozen other states have misclassification task forces.
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