States like Pennsylvania are working to resolve the problem regarding employers in the construction industry misclassifying workers as independent contractors. According to the Philadelphia Business Journal, Governor Ed Rendell signed into law House Bill 400, which makes intentionally misclassifying construction workers a third-degree felony.
Under House Bill 400, the classification of Philly workers as contractors can also fall under a summary offense due to negligence, and breaking the law would result in paying a fine. When employers wrongly classify their employees, they shortchange the workers and the state by avoiding paying worker's compensation costs, unemployment taxes, and payroll. A Philadelphia employment lawyer can further explain an employee's rights to proper compensation and wages.
"It's a great first step in resolving an issue that has been an ongoing problem for years in the construction industry," said Frank Sirianni, president of the Pennsylvania Building & Construction Trades Council. The illegal practice has also affected Philadelphia plumbers, carpenters, laborers, and even the truck industry.
The bill fines offenders $1,000 for the first violation and up to $2,500 for every following violation. Those who oppose the bill think it will hurt businesses and make it more burdensome for individuals who want to start their own business as an independent contractor. Yet, advocates argue that the bill helps create a source of tax revenue especially when budget deficits are a growing problem in many states. Supporters also believe the bill can replenish unemployment compensation funds.
House Bill 400 will go into effect 120 days after Rendell has signed it. If you have any questions or concerns regarding the bill or worker's compensation, talk to a Philadelphia employment lawyer or visit the Related Resources links for general information.