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State, Delco join forces to battle construction misclassifications (PA)

Posted by National Alliance for Fair Contracting on

Alex Rose
Mar 10, 2020

CHESTER – Delaware County District Attorney Jack Stollsteimer joined state Attorney General Josh Shapiro Monday in announcing a novel joint pilot program aimed at combatting the misclassification of construction workers through criminal prosecutions.

Stollsteimer explained that Act 72 of 2011, also known as the Construction Workplace Misclassification Act, was designed to protect construction workers from being forced to misidentify as “independent contractors” rather than employees and provides certain monetary penalties.

Misclassification of workers across numerous industries is a problem not only for employees who should be receiving certain benefits, but also for society at large when payroll tax, unemployment insurance and workers compensation go unpaid.

“Whether you’re a laborer or not, this issue impacts you in a big way, in a really big way, and we will not tolerate it,” Shapiro told a group of about 30 labor leaders and politicians assembled at the Laborers Union 413 hall on Penn Street.

Much of the problem can be laid at the feet of dishonest “labor brokers” who recruit workers and send them out to fill temporary positions for contractors or subcontractors. The brokers are supposed to take care of things like pay, tax withholdings and workers compensation coverage, but often forgo those formalities, pay workers under the table and pass the savings on to contractors who can then undercut legitimate competitors.

Shapiro said that in 2019, 163 construction employers misclassified 1,347 employees in Pennsylvania – and those were just the ones the state knows about. Those workers represented $27.2 million in underreported wages that could have been taxed for things like roads or schools, Shapiro said.

But he added that the Pennsylvania Department of Labor and Industry collected only $531,000 in administrative penalties from those companies, which he deemed “the cost of doing business” for unscrupulous employers.

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Shapiro said the partnership with the district attorney’s office is key to that approach because Act 72 allows for the attorney general only to bring misdemeanor and summary charges against offenders. The district attorney’s office, on the other hand, might be able to pursue felony charges for things like wage theft or labor trafficking.

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Measure Twice, Cut Once: Understanding the Construction Workplace Misclassification Act

Posted by National Alliance for Fair Contracting on

By: Susan Nanes
August 2, 2018

Measure twice, cut once. It’s a carpenter’s motto reminding us that it is better to spend a little more effort up front to be certain about what we’re doing than to have to spend time, money, and energy trying to fix a mistake after the fact. This article provides some background and basics of the Construction Workplace Misclassification Act (CWMA) so that attorneys practicing in the construction field will be aware of the pitfalls: should a construction employer seek to cut corners and avoid paying workers’ compensation premiums (and other required taxes), or even just err by calling its workers independent contractors, they may be subject to civil and even criminal penalties. It is better to take the time, do the due diligence and measure twice. This article will briefly explain the rationale for the CWMA’s enactment, address the previous legal approach, present the contours of the CWMA, and finally touch on Pennsylvania cases evaluating and applying the CWMA.

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