Pennsylvania Joins Campaign Against Employee Misclassification
Last Wednesday, Pennsylvania Governor Edward G. Rendell signed the Construction Workplace Misclassification Act, which adds Pennsylvania to the growing list of states passing legislation designed to eliminate the practice of worker misclassification by imposing criminal penalties upon employers who intentionally label their employees as independent contractors.
Like laws passed in other states, the new act spells out the criteria for classifying a worker as an independent contractor. The act states that a person in the construction industry may only be paid as an independent contractor if that person has a written contract for service, is “free from control or direction” as to how to perform the service, and if that person normally performs the service as an independent business. The new law makes it a criminal offense to misclassify workers, but also takes it a step further. Section 4(E) states:
“A party that does not meet the definition of ‘Employer’ in Section 2, but which intentionally contracts with an employer knowing the employer intends to misclassify employees in violation of this act, shall be subject to the same penalties, remedies or other actions as the employer found to be in violation of this act.”
In other words, it will now be a criminal offense to even contract with a subcontractor who misclassifies workers. It will be interesting to see how some of these cases play out in court, and whether other states will decide to follow Pennsylvania’s example.
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