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House votes to make misclassifying independent contractors a third-Degree felony

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in Compensation and Benefits,Human Resources

A bill approved by the state House in June—the Construction Industry Independent Contractor Act—would make intentionally misclassifying workers as independent contractors a third-degree felony for employers in residential or commercial construction. Cases of negligence would constitute a summary offense.

The bill passed 122-76 despite protests from lawmakers who believed the penalties were too severe and the act would hurt the state’s economy.

“I can’t believe that we want to create an environment where we make Pennsylvania business people who try to legitimately follow the rules that aren’t real clear … criminals,” said Rep. Scott Boyd, R-Lancaster.

Rep. Bryan Lentz, D-Delaware, who sponsored the bill, countered, “I’m really amazed at the horror that people have at the fact that we may impose harsh penalties on people that commit intentional criminal acts.”

Rep. Mike Turzai, R-Allegheny, said the bill, if finalized, would devastate small businesses and drive jobs out of state.

Rep. Dan Surra, D-Elk, said the bill won’t slow construction in the state. “What are they going to do, build a house in North Carolina and move [it] to Pennsylvania?”

The bill’s fate in the Republican-controlled Senate is far from certain.

Note: The rules for differentiating “aren’t real clear,” indeed. For guidance, visit www.dol.gov/esa/whd/regs/compliance/whdfs13.pdf, Employment Relationships Under the Fair Labor Standards Act (FLSA).

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