Regular Session 2019-2020 House Bill 2215 P.N. 3129

PRINTER'S NO. 3129

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2215

Session of

2020

INTRODUCED BY BURGOS, TOOHIL, DELLOSO, KENYATTA, HOHENSTEIN,

SCHLOSSBERG, OTTEN AND MALAGARI, JANUARY 14, 2020

REFERRED TO COMMITTEE ON LABOR AND INDUSTRY, JANUARY 14, 2020

AN ACT

Providing for criteria for independent contractors in the

application-based service industry and for the powers and

duties of the Department of Labor and Industry and the

Secretary of Labor and Industry; and imposing penalties.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the Application-

Based Company Worker Misclassification Act.

Section 2. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Application-based company." A person operating on a

computer application-based or mobile application-based platform

to provide services through employees engaged in the performance

of short-term tasks. The term includes a commercial business

model in which:

(1) a person provides, for a fee, a mobile application

that suppliers and customers use to buy and sell goods or

services; or

(2) a person relies on individuals who rent or share

real or personal property or services such as cars, homes and

personal time to other individuals in a peer-to-peer fashion.

"Department." The Department of Labor and Industry of the

Commonwealth.

"Employee." Either of the following:

(1) In relation to workers' compensation, shall have the

meaning given to it in section 104 of the Workers'

Compensation Act.

(2) In relation to unemployment compensation, shall have

the meaning given to it in section 4(i) of the Unemployment

Compensation Law.

"Employer." An application-based company that:

(1) In relation to workers' compensation, meets the

definition of "employer" in section 103 of the Workers'

Compensation Act.

(2) In relation to unemployment compensation, meets the

definition of "employer" in section 4(j) of the Unemployment

Compensation Law.

"Secretary." The Secretary of Labor and Industry of the

Commonwealth.

"Unemployment Compensation Law." The act of December 5, 1936

(2nd Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment

Compensation Law.

"Workers' Compensation Act." The act of June 2, 1915

(P.L.736, No.338), known as the Workers' Compensation Act.

Section 3. Employee determination.

A person providing labor or services for remuneration to an

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application-based company shall be considered an employee rather

than an independent contractor unless the application-based

company demonstrates that all of the following conditions are

satisfied:

(1) The person is free from the control and direction of

the application-based company in connection with the

performance of the work, both under the contract for the

performance of the work and in fact.

(2) The person performs work that is outside the usual

course of the application-based company's business.

(3) The person is customarily engaged in an

independently established trade, occupation or business of

the same nature as that involved in the work performed.

Section 4. Improper classification of employees.

(a) Violation.--An employer, or an 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.

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(1) If the secretary receives information indicating

that a person has violated this act, the secretary may

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; or

(ii) immediately assess penalties as provided under

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 that

intentionally contracts with an employer knowing the employer

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 company for which the services are

performed in good faith believed that the individual who

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performed the services qualified as an independent contractor at

the time the services were performed.

Section 5. Criminal penalties.

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

employer, that intentionally violates section 4(a) commits:

(1) A misdemeanor of the third degree for a first

offense.

(2) A misdemeanor of the second degree for a second or

subsequent offense.

(b) Summary offense.--An employer, or officer or agent of an

employer, that negligently fails to properly classify an

individual as an employee under section 4(a) commits a summary

offense and shall, upon conviction, be sentenced to pay a fine

of not more than $1,000. Evidence of a prior conviction under

this subsection shall be admissible as evidence of intent under

subsection (a).

(1) The Attorney General shall have concurrent

prosecutorial jurisdiction with the district attorney of the

appropriate county for violations under this section and any

offense arising out of the activity prohibited by this

section.

(2) No person charged with a violation of this section

by the Attorney General may have standing to challenge the

authority of the Attorney General to prosecute the case, and,

if a challenge is made, the challenge shall be dismissed. No

relief shall be available in the courts of this Commonwealth

to the person making the challenge.

Section 6. Administrative penalties.

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

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has violated this act, the secretary may assess and collect

civil penalties of not more than $1,000 for the first violation,

and not more than $2,500 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. Procedure.

(a) Hearings.--Actions taken under sections 4(c) and 6 shall

be subject to the provisions of 2 Pa.C.S. (relating to

administrative law and procedure).

(b) Subpoena powers.--The department shall have the power to

subpoena witnesses, administer oaths, examine witnesses and take

testimony or compel the production of documents. The secretary

may petition the Commonwealth Court to enforce any order or

subpoena issued under this act.

Section 8. Certain agreement prohibited.

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

individual enter into an agreement or sign a document which

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 and

not more than $2,500. Each violation shall be considered a

separate offense under this section.

Section 9. Retaliation for action prohibited.

(a) General rule.--It shall be unlawful for an employer, or

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officer or agent of an employer, to discriminate in any manner

or take adverse action against any person in retaliation for

exercising rights protected under this act. Rights protected

under this act include, but are not limited to, the right to

file a complaint or inform any person about an employer's

noncompliance with this act.

(b) Good faith allegations of noncompliance.--Any person who

in good faith alleges noncompliance with this act shall be

afforded the rights provided by this act, notwithstanding the

person's failure to prevail on the merits.

a person within 90 days of the person's exercise of rights

protected under this act shall raise a rebuttable presumption of

having done so in retaliation for the exercise of those rights.

Section 10. Rules and regulations.

The department may promulgate rules and regulations necessary

to implement this act.

Section 11. Effective date.

This act shall take effect in 120 days.

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