Regular Session 2017-2018 House Bill 2443 P.N. 3934

PRINTER'S NO. 3934

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2443

Session of

2018

INTRODUCED BY GALLOWAY, THOMAS, W. KELLER, DAVIS, CALTAGIRONE,

PASHINSKI, WATSON, BULLOCK, NEILSON, HARKINS, KINSEY, KORTZ,

BARBIN, D. MILLER, McCLINTON, WARREN, STURLA, BRIGGS, RABB,

SCHLOSSBERG, KRUEGER-BRANEKY, DiGIROLAMO, SNYDER, J. McNEILL,

TAI, GOODMAN, BOYLE, MULLERY, GAINEY, D. COSTA AND MUSTIO,

SEPTEMBER 5, 2018

REFERRED TO COMMITTEE ON LABOR AND INDUSTRY, SEPTEMBER 5, 2018

AN ACT

Amending the act of October 13, 2010 (P.L.506, No.72), entitled

"An act providing for the criteria for independent

contractors in the construction industry and for the powers

and duties of the Department of Labor and Industry and the

Secretary of Labor and Industry; and imposing penalties,"

further providing for independent contractors, for improper

classification of employees, for administrative penalties,

for stop-work orders, for certain agreement prohibited and

for use of penalty funds.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Sections 3(a), 4, 6, 7(c), 9 and 12 of the act of

October 13, 2010 (P.L.506, No.72), known as the Construction

Workplace Misclassification Act, are amended to read:

Section 3. Independent contractors.

(a) General rule.--For purposes of workers' compensation,

unemployment compensation and improper classification of

employees provided herein, an individual who performs services

in the construction industry for remuneration is an independent

contractor only if:

(1) The individual has a written contract [to perform

such services] that is project-specific and contains a

particular scope of work and definitive time period to

perform the services.

(2) The individual is free from control or direction

over performance of such services both under the contract of

service and in fact.

(3) As to such services, the individual is customarily

engaged in an independently established trade, occupation,

profession or business.

* * *

Section 4. Improper classification of employees.

(a) Violation.--An employer, or officer or agent of an

employer, shall be in violation of this act and shall be subject

to the penalties, remedies and actions contained in this act if

the employer, officer or agent:

(1) fails to properly classify an individual as an

employee for purposes of the Workers' Compensation Act and

fails to provide the coverage required under the Workers'

Compensation Act; or

(2) fails to properly classify an individual as an

employee for purposes of the Unemployment Compensation Law

and fails to pay contributions, reimbursements or other

amounts required to be paid under the Unemployment

Compensation Law.

(b) Separate offenses.--Each individual who is not properly

classified as an employee shall be the basis of a separate

violation of this section.

(b.1) Complaint.--If the secretary receives a written

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complaint indicating that any person has violated this act, the

secretary shall within 15 days of the receipt of the complaint

respond in writing to the person who filed the complaint that

the complaint has been received.

(1) If the secretary receives a written complaint or

information indicating that any person has violated this act,

the secretary [may] shall, unless the complaint appears to be

frivolous, investigate the matter and issue an order to show

cause why the person should not be found in violation of this

act.

(2) A person served with an order to show cause shall

have a period of 20 days from the date the order is served to

file an answer in writing.

(3) If the person fails to file a timely and adequate

answer to the order to show cause, the secretary may,

following notice and hearing, do any of the following:

(i) petition a court of competent jurisdiction to

issue a stop-work order as provided in section 7; or

(ii) immediately assess penalties as provided in

section 6.

(d) Enforcement.--If, subsequent to issuing an order to show

cause under subsection (c), the secretary finds probable cause

that an employer has committed a criminal violation of this act,

the secretary shall refer the matter to the Office of Attorney

General for investigation or impose administrative penalties

under section 6.

(e) Acting in concert with other parties.--A party that does

not meet the definition of "employer" in section 2, but which

intentionally contracts with an employer knowing the employer

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intends to misclassify employees in violation of this act, shall

be subject to the same penalties, remedies or other actions as

the employer found to be in violation of this act.

(f) Defense.--It shall be a defense to an alleged violation

of this section if the person for whom the services are

performed in good faith believed that the individual who

performed the services qualified as an independent contractor

at the time the services were performed.

Section 6. Administrative penalties.

(a) General rule.--When the secretary finds that a person

has violated this act, the secretary may assess and collect

civil penalties of not more than [$1,000] $2,500 for the first

violation, and not more than [$2,500] $5,000 for each subsequent

violation.

(b) Factors to be considered.--When determining the amount

of the penalty to be imposed, the secretary shall consider

factors including, but not limited to:

(1) The history of previous violations by the employer.

(2) The seriousness of the violation.

(3) The good faith of the employer.

(4) The size of the employer's business.

Section 7. Stop-work orders.

* * *

$2,500 per day against an employer for each day that the

employer conducts business operations that are in violation of a

stop-work order issued under this section.

Section 9. Certain agreement prohibited.

(a) Violation.--No person shall require or demand that an

individual enter into an agreement or sign a document which

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results in the improper classification of that individual as an

independent contractor.

(b) Penalty.--A violation of subsection (a) shall be

punishable by an administrative fine of not less than [$1,000]

$2,500 and not more than [$2,500] $5,000. Each violation shall

be considered a separate offense under this section.

Section 12. Use of penalty funds.

Any sum collected as a penalty under:

(1) Sections 6, 7 and 9 for a violation of section 4(a)

(1) shall be [paid into] divided equally between the Workers'

Compensation Administration Fund and the department for costs

related to enforcement.

(2) Sections 6, 7 and 9 for a violation of section 4(a)

(2) shall be [paid into] divided equally between the Special

Administration Fund created under section 601.1 of the

Unemployment Compensation Law and the department for costs

related to enforcement.

(3) Section 9 for a violation of any other provision of

this act shall be divided equally between the Workers'

Compensation Administration Fund [and], the Special

Administration Fund and the department for costs related to

enforcement.

Section 2. This act shall take effect in 60 days.

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