State Legislation Targets Independent Contractors

April 2010Newsletters In The Zone

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House Bill 400 , prime sponsor Pennsylvania State Representative Bryan Lentz (D-Delaware County), creates the Construction Industry Independent Contractor Act. It passed out of the state House of Representatives last spring and awaits consideration by the Senate, which is expected in the coming months. Pennsylvania business groups have generally opposed the legislation while it has received its biggest support from labor.

The legislation deals with employers in the construction industry who are improperly classifying employees as independent contractors or paying them unreported compensation. It seeks to better define the differences between an employee and independent contractor.

Lentz said intentional misclassification of construction workers, such as carpenters, plumbers and laborers, has been on the rise in recent years, and the practice is driving down wages and living standards for Pennsylvania workers. He also said some workers are not told about their classification as independent contractors by their employers.

House Bill 400 would require people who work in the construction industry to be employees of the party that pays their wages unless they can prove they are legitimate independent contractors. That would mean the service or services they performed are outside of the usual course of the business of that particular employer; and that they are customarily engaged in an independently established trade, occupation, profession or business.

The bill would make the intentional misclassification of an employee a third-degree felony and impose fines. Misclassification due to negligence would be a summary offense with fines.

For more information, please contact Robert W. Gundlach, Jr. at 215.918.3636 or [email protected].