Regular Session 2023-2024 House Bill 1224 P.N. 1315

PRINTER'S NO. 1315

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1224

Session of

2023

INTRODUCED BY WARREN, SANCHEZ, DELLOSO, HOWARD, MADDEN AND

HOHENSTEIN, MAY 24, 2023

REFERRED TO COMMITTEE ON LABOR AND INDUSTRY, MAY 24, 2023

AN ACT

Providing for criteria for independent contractors in the

traveling sales industry and for the powers and duties of the

Department of Labor and Industry; and imposing penalties.

TABLE OF CONTENTS

Section 1. Short title.

Section 2. Definitions.

Section 3. Employee determination.

Section 4. Improper classification of employees.

Section 5. Registration required.

Section 6. Payment of compensation, deductions, statements and

records.

Section 7. Worker safety.

Section 8. Insurance coverage.

Section 9. Prohibited practices.

Section 10. Criminal offenses.

Section 11. Administrative penalties.

Section 12. Procedure.

Section 13. Certain agreements prohibited.

Section 14. Retaliation prohibited.

Section 15. Rules and regulations.

Section 16. Effective date.

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 Traveling

Sales Crew Worker Employment 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:

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

Commonwealth.

"Employee." Either of the following:

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

have the meaning given to "employe" in section 104 of the

Workers' Compensation Act.

(2) In relation to unemployment compensation, the term

shall have the meaning given to "employe" in section 4(i) of

the Unemployment Compensation Law.

"Employer." Either of the following:

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

have the meaning given to it in section 103 of the Workers'

Compensation Act.

(2) In relation to unemployment compensation, the term

shall have the meaning given to it in section 4(j) of the

Unemployment Compensation Law.

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

Commonwealth.

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"Traveling sales crew." The following:

(1) Two or more individuals who are employed as

salespersons or in related support work who travel together

in a group and who are absent overnight from their permanent

places of residence for the purpose of selling consumer goods

or services to consumers from house to house, or on any

street or in any other place that is open to the public.

(2) The term does not include:

(i) two or more individuals who are traveling

together for the purpose of participating in a trade show

or convention; or

(ii) two or more immediate family members who are

traveling together for the purpose of selling consumer

goods or services.

"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 worker on a traveling sales crew shall be considered an

employee rather than an independent contractor unless the hiring

entity demonstrates that all of the following conditions are

satisfied:

(1) The individual is free from the control and

direction of the hiring entity in connection with the

performance of the work, both under the contract for the

performance of the work and in fact.

(2) The individual performs work that is outside the

usual course of the hiring entity's business.

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(3) The individual 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, officer or agent of an employer

shall be in violation of 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.

(1) If the secretary receives information indicating

that an individual has violated this act, the secretary may

investigate the matter and issue an order to show cause why

the individual 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 individual 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:

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(i) petition a court of competent jurisdiction to

issue a stop-work order; or

(ii) immediately assess administrative penalties as

provided in section 11.

(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 11.

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

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

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 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 5. Registration required.

(a) Authorization.--No person may employ, offer to employ or

otherwise recruit an individual to work as a traveling sales

crew worker without first obtaining a certificate of

registration from the department.

(b) Application for certificate.--An individual seeking a

certificate of registration must complete an application meeting

the minimum requirements specified in subsection (c) and pay a

registration fee determined by the department. A certificate of

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registration is valid for 12 months unless sooner suspended,

restricted or revoked and is nontransferable. A registrant may

renew a certificate of registration by submitting an application

under this subsection and paying the registration fee not less

than 30 days before the expiration date of the certificate of

registration.

of registration must contain all of the following information:

(1) The name of the applicant, the address and telephone

number of the applicant's principal place of business and, if

the applicant is engaged in sales activities on behalf of a

principal, the name, address and telephone number of the

principal.

(2) If the applicant is a corporation, the date and

place of the applicant's incorporation or, if the applicant

is a limited liability company, the date and place of the

applicant's organization.

(3) The names and permanent home addresses of the

proprietors, managing partners, managers or principal

officers of the applicant, together with proof of

identification of those individuals, which may be in the form

of a birth certificate or a valid driver's license issued by

the Department of Transportation or by another state that

contains a photograph of the license holder.

(4) The names, permanent home addresses, driver's

license numbers and dates of birth of the employees, agents

or representatives of the applicant who supervise or

transport traveling sales crew workers.

(5) Information regarding the criminal record, if any,

of proprietors, managing partners, managers or principal

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officers of the applicant and of the employees, agents or

representatives of the applicant who supervise or transport

traveling sales crew workers.

(6) The Social Security number or Federal employer

identification number of the applicant.

(7) The type of sales activities to be performed and the

nature of the consumer goods or services to be sold by the

traveling sales crew workers of the applicant. If the goods

to be sold are magazine subscriptions, the applicant shall

provide the names, addresses and telephone numbers of the

publishers of those magazines.

(8) A statement identifying each motor vehicle that will

be used to transport the applicant's traveling sales crew

workers, including the type and license number of each motor

vehicle, and documentation showing that each motor vehicle is

in compliance with applicable Federal and State safety

standards.

(9) A statement indicating whether the duties of the

applicant's traveling sales crew workers will include the

storage, handling or transportation of hazardous materials or

may result in any other exposure of those traveling sales

crew workers to hazardous materials and, if so, documentation

showing that the applicant is in compliance with all Federal

and State safety standards that are applicable to the

storage, handling and transportation of the hazardous

materials.

(10) Any other information that the department considers

relevant to the protection of the health, safety and welfare

of the traveling sales crew workers employed by the

applicant.

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(d) Receipt of application.--

(1) The department shall, upon receiving an application,

investigate the applicant to determine whether the applicant

is qualified under subsection (c) to receive a certificate of

registration. The investigation shall include a criminal

history search by the department of the proprietors, managing

partners, managers or principal officers of the applicant and

of the employees, agents or representatives of the applicant

who supervise or transport traveling sales crew workers.

(2) If the applicant being investigated is, or at any

time within the five years preceding the date of the

application has been, a nonresident of this Commonwealth or

if the department determines that any information obtained as

a result of the investigation provides a reasonable basis for

further investigation, the department may require the

applicant being investigated to be fingerprinted. The

department may provide for the submission of the fingerprint

cards to the Federal Bureau of Investigation for the purposes

of verifying the identification of the applicant and

obtaining the applicant's criminal conviction record. The

department shall keep confidential the criminal history

record information.

(e) Issuance.--Subject to subsection (f) and after

completing the investigation under subsection (d), the

department shall issue a certificate of registration to the

applicant if the department determines that the applicant meets

the minimum requirements under this section and any rules

promulgated by the department for issuance of a certificate of

registration and is satisfied that the applicant will comply

with this section and those rules.

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(f) Denial.--The department may deny, suspend, revoke,

restrict or refuse to renew a certificate of registration if the

department determines that any of the following apply:

(1) The applicant or registrant is not the real party in

interest with respect to the application or certificate of

registration and the real party in interest has previously

been denied issuance or renewal of a certificate of

registration, has had a certificate of registration

suspended, revoked or restricted or is not qualified to

receive a certificate of registration under subsection (e).

(2) A proprietor, managing partner, manager or principal

officer of the applicant, or an employee, agent or

representative of the applicant who supervises or transports

traveling sales crew workers has been convicted of a

disqualifying offense, as determined by the department,

within the five years preceding the date of the application.

(3) The applicant or registrant has made a material

misrepresentation or false statement in the application for

the certificate of registration.

(4) The applicant or registrant has failed to notify the

department of any change in the information submitted in the

application as required under subsection (h).

(5) The applicant or registrant has:

(i) failed to maintain proof of financial

responsibility as required under subsection (i);

(ii) failed to comply with the written disclosure

statement requirements under subsection (c)(9);

(iii) failed to pay wages, provide a statement or

keep, preserve or furnish records as required under

section 6;

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(iv) violated a safety standard under section 7;

(v) failed to maintain insurance coverage as

required under section 8;

(vi) engaged in a practice prohibited under section

(vii) failed to pay a penalty imposed under section

11 or to comply with an order of the department imposed

as a result of a violation of this section or any rule

promulgated by the department under section 15; or

(viii) otherwise failed to comply with this section

or any rule promulgated by the department.

(g) Certificate of registration.--A registrant and the

employees, agents and representatives of a registrant who

supervise or transport traveling sales crew workers shall carry

at all times while engaging in traveling sales crew activities a

copy of the registrant's certificate of registration and shall

exhibit that copy upon the request of a deputy of the

department, law enforcement officer or person with whom the

registrant, employee, agent or representative is doing business.

Failure to exhibit a copy of the certificate of registration

upon request is prima facie evidence of a violation of this

section.

(h) Changes.--If any change occurs in any of the information

submitted to the department under subsection (c), the registrant

shall notify the department of that change within 30 days after

the change occurs.

(i) Financial responsibility.--

(1) An applicant shall establish proof of ability to pay

any compensation owed to a traveling sales crew worker

employed by the applicant and any penalties that may be

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imposed under section 11.

(2) An applicant shall prove ability to pay under

paragraph (1) by maintaining one of the following commitments

in an amount approved by the department, but not less than

$10,000 and in a form approved by the department:

(i) A bond.

(ii) A certificate of deposit.

(iii) An escrow account.

(iv) An irrevocable letter of credit.

(3) The commitment described in paragraph (2) shall be

established in favor of or made payable to the department,

for the benefit of the Commonwealth and any traveling sales

crew worker who does not receive the compensation earned by

the worker. The applicant shall file with the department any

agreement, instrument or other document necessary to enforce

the commitment against the applicant or any relevant third

party or both.

(j) Disclosure statement.--

(1) At the time an individual is offered employment as a

traveling sales crew worker or is otherwise recruited to work

as a traveling sales crew worker, the employer shall provide

the individual with a written disclosure statement of the

terms of employment. If the individual accepts the offer of

employment, the employer and the individual shall sign the

written disclosure statement. A written disclosure statement

shall include all of the following information:

(i) The place or places of employment, stated with

as much specificity as possible.

(ii) The compensation, including wage rates,

commissions, bonuses and contest awards, to be paid.

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(iii) The pay period and the manner in which

compensation will be paid.

(iv) The types of work in which the individual may

be employed.

(v) The number of days per week and hours per day

that the individual may be required to engage in sales

activities or related support work.

(vi) The nature and frequency of any employment-

related meetings that the individual may be required to

attend, the time of day of those meetings and how

compensation is paid for attendance at those meetings.

(vii) The period of employment, including the

approximate beginning and ending dates of employment.

(viii) A description of the board, lodging and other

facilities to be provided by the employer to the

individual and any costs to be charged to the individual

for those facilities.

(ix) A description of the transportation to be

provided by the employer to the individual.

(x) If the employment will involve the storage,

handling or transportation of hazardous materials or may

involve any other exposure to hazardous materials, a

description of the hazardous materials.

(xi) Whether workers' compensation is provided and,

if so, the name and telephone number of the employee,

agent or representative of the employer to whom notice of

a claim for workers' compensation must be provided and

the time period within which that notice must be

provided.

(2) An employer of a traveling sales crew worker shall

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comply with the terms of a disclosure statement provided

under paragraph (1). An employer may change the terms of a

disclosure statement, but no change is effective until a

supplemental disclosure statement is signed by the employer

and the traveling sales crew worker. Any change to the terms

of a disclosure statement may apply prospectively only.

Section 6. Payment of compensation, deductions, statements and

records.

(a) Payment of compensation.--An employer shall pay all

compensation earned by a traveling sales crew worker on regular

paydays designated in advance by the employer but in no case

less often than semimonthly. Compensation shall be paid in

United States currency or by check or draft.

(b) Deductions.--An employer may deduct from a traveling

sales crew worker's compensation the cost to the employer of

furnishing board, lodging or other facilities to the worker if:

(1) the board, lodging or other facilities are

customarily furnished by the employer to the traveling sales

crew workers of the employer;

(2) the amount deducted does not exceed the fair market

value of the board, lodging or other facilities and does not

include any profit to the employer; and

(3) the traveling sales crew worker has previously

authorized the deduction by signing a written disclosure

statement under section 5(j) that includes a description of

the board, lodging and other facilities to be provided and

any costs to be charged to the traveling sales crew worker

for those facilities.

compensation to a traveling sales crew worker a written

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statement itemizing the amount of gross and net compensation

paid to the worker and the amount of and reason for each

deduction from the amount of gross compensation. An employer

shall:

(1) keep records of the information specified in this

paragraph with respect to each traveling sales crew worker of

the employer;

(2) preserve those records for three years after the

worker leaves the employment of the employer; and

(3) furnish those records to the department on request.

(d) Claims.--A traveling sales crew worker who is owed

compensation may file a wage claim with the department.

Section 7. Worker safety.

(a) Vehicles.--An employer of a traveling sales crew worker

shall maintain and operate, or cause to be maintained and

operated, a motor vehicle used to transport a traveling sales

crew worker in compliance with applicable Federal and State

safety standards, including any additional safety standards

relating specifically to the transportation of traveling sales

crew workers prescribed by the department by regulation

promulgated under section 15. In prescribing additional safety

standards, the department shall consider all of the following:

(1) The types of motor vehicles that are commonly used

to transport traveling sales crew workers.

(2) The safe passenger-carrying capacity of those motor

vehicles.

(3) The extent to which a proposed safety standard would

cause an undue burden to traveling sales crew employers.

(4) Any safety standards prescribed by the United States

Department of Transportation under 49 U.S.C. (relating to

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transportation) that are applicable to the maintenance and

operation of a motor vehicle that is commonly used to

transport traveling sales crew workers.

(b) Hazardous materials.--If the duties of a traveling sales

crew worker include the storage, handling or transportation of

hazardous materials or may result in any other exposure of a

traveling sales crew worker to hazardous materials, the employer

shall ensure that the hazardous materials are stored, handled

and transported and that the traveling sales crew worker is

trained in the safe storage, handling and transportation of

hazardous materials, in accordance with all applicable Federal

and State safety standards, including any additional safety

standards relating specifically to the storage, handling and

transportation of hazardous materials by traveling sales crew

workers or to the exposure of traveling sales crew workers to

hazardous materials prescribed by the department by regulation

promulgated under section 15. In prescribing additional safety

standards, the department shall consider all of the following:

(1) The types of hazardous materials that are included

in products commonly sold by traveling sales crews.

(2) The extent to which a proposed safety standard would

cause an undue burden to traveling sales crew employers.

(3) Any safety standards prescribed by the United States

Department of Transportation under 49 U.S.C. Ch. 51 (relating

to transportation of hazardous material) or by the Federal

Occupational Safety and Health Administration under 29 U.S.C.

Ch. 15 (relating to occupational safety and health) that are

applicable to the storage, handling and transportation of

hazardous materials by a traveling sales crew worker or to

any other exposure of a traveling sales crew worker to

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hazardous materials.

Section 8. Insurance coverage.

The employer of a traveling sales crew worker shall have in

force a policy of insurance that insures the employer, in an

amount prescribed by the department by regulation promulgated

under section 15, against liability for damages to persons and

property arising out of:

(1) the ownership or operation by the employer or by an

employee, agent or representative of the employer of a motor

vehicle that is used to transport a traveling sales crew

worker; and

(2) any negligent act or omission of the employer or of

an employee, agent or representative of the employer.

Section 9. Prohibited practices.

No employer of a traveling sales crew worker and no employee,

agent or representative of that employer who supervises or

transports traveling sales crew workers may do any of the

following:

(1) Employ or permit to work as a traveling sales crew

worker a person under 18 years of age or employ or permit to

work as a traveling sales crew worker a person 18 years of

age or older who has been adjudged incompetent, without the

permission of the person's guardian.

(2) Require a traveling sales crew worker to engage in

any in-person sales or solicitation activities before 9 a.m.

or after 9 p.m.

(3) Consider a traveling sales crew worker to be an

independent contractor rather than an employee.

(4) Require a traveling sales crew worker to purchase

any consumer goods or services solely from the employer or to

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pay any of the employer's business expenses, except as

permitted under section 6(b).

(5) Abandon a traveling sales crew worker who is unable

to work due to illness or injury or who is discharged from

employment for reasons other than misconduct without

providing for the return of the traveling sales crew worker

to their permanent place of residence.

(6) Require a traveling sales crew worker to relinquish

custody of any personal property to the employer, to any

employee, agent or representative of the employer who

supervises or transports traveling sales crew workers or to

any other traveling sales crew worker of the employer.

(7) Prohibit or restrict a traveling sales crew worker

from contacting a family member, friend or other person while

traveling with a traveling sales crew.

(8) Intentionally inflict or threaten to inflict bodily

harm on a traveling sales crew worker or damage to the

property of a traveling sales crew worker as a means of

discipline or motivation.

(9) Advise or counsel a traveling sales crew worker to

make false representations to a person to whom the traveling

sales crew worker is offering consumer goods or services

concerning the traveling sales crew worker's motivation for

selling those goods or services.

(10) Discharge or discriminate against a person for

opposing a practice prohibited under this section.

Section 10. Criminal offenses.

(a) Offense defined.--

(1) An employer, or officer or agent of an employer,

that intentionally violates section 4(a) commits:

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

offense.

(ii) A misdemeanor of the second degree for a second

or subsequent offense.

(2) An employer, or officer or agent of an employer,

that negligently violates section 4(a) commits a summary

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

fine of not more than $1,000.

(3) Evidence of a prior conviction under this subsection

shall be admissible as evidence of intent under subsection

(a).

(b) Concurrent jurisdiction.--

(1) The Attorney General shall have concurrent

prosecutorial jurisdiction with the district attorney of the

appropriate county for violations under 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. If a

challenge is made, the challenge shall be dismissed and no

relief may be available in the courts of this Commonwealth to

the person making the challenge.

Section 11. 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 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.

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(2) The seriousness of the violation.

(3) The good faith of the employer.

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

Section 12. Procedure.

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

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 13. Certain agreements prohibited.

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

individual enter into an agreement or sign a document that

results in the improper classification of that individual as an

independent contractor.

(b) Penalty.--Each violation of this section shall be

considered a separate offense.

Section 14. Retaliation prohibited.

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

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.--A person who

in good faith alleges noncompliance with this act shall be

afforded the rights provided by this section, notwithstanding

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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 15. Rules and regulations.

The department may promulgate rules and regulations necessary

to implement and enforce this act.

Section 16. Effective date.

This act shall take effect in 120 days.

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