Pennsylvania Construction Workers and Employee Misclassification
Many employers in the Pennsylvania building trades will attempt to classify employees as “independent contractors” to avoid paying taxes on their wages as well as other potential liabilities such as workers compensation. The Construction Workplace Misclassification Act, 43 P.S. §§ 933.1 – 933.17 (“Act 72” or “The Act”), went into effect on February 10, 2011 and prohibits employers from misclassifying those employees who are not true “independent contractors.” The Act establishes a definition of “independent contractor” for purposes of workers’ compensation, unemployment compensation, and Act 72. The Act provides that in order for a worker to be deemed an independent contractor, the worker must: (1) have a written contract to perform services, (2) be free from control or direction over the performance of work under contract, and (3) be customarily engaged in an independently established trade or business.
The Act provides for the imposition of criminal and administrative penalties against employers, or officers or agents thereof, which are found to have committed violations. Additionally, the Act empowers the Department of Labor and Industry to petition a court to issue a stop-work order mandating the partial or complete cessation of work at the site of an ongoing intentional misclassification. Section 4(c) of the Act authorizes the Department of Labor and Industry to undertake remedial action if the Department receives evidence establishing that a person has violated the Act. Section 10(a) explicitly prohibits an employer from discriminating in any manner or taking adverse action against any person for exercising any right protected by the Act, including the filing of a complaint with the Department or informing any person about an employer’s noncompliance. Section 10(b) makes clear that a complainant’s failure to prevail on the merits on allegations of employer noncompliance does not remove the retaliation prohibition set forth in subsection (a), so long as the complainant’s allegations were made in good faith. Finally, section 10(c) states that an adverse employment action taken by an employer within 90 days of an employee’s exercise of any rights under the Act creates a rebuttable presumption of a prohibited retaliation by the employer.
If you believe that your employer is misclassifying employees as independent contractors you can obtain a complaint form at http://www.dli.pa.gov/Businesses/swif/Documents/LLC-72.pdf and you can file a complaint with the Bureau of Labor Law Compliance (800-932-0665).