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A02670
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1751
Session of
2023
INTRODUCED BY DONAHUE, KAZEEM, MADDEN, PIELLI, McNEILL,
HOHENSTEIN, SCHLOSSBERG, BRENNAN, DELLOSO, HADDOCK, OTTEN,
GIRAL, SANCHEZ, HILL-EVANS, BOYD AND CIRESI, OCTOBER 13, 2023
REFERRED TO COMMITTEE ON LABOR AND INDUSTRY, OCTOBER 13, 2023
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 definitions, for independent
contractors, for improper classification of employees and for
criminal penalties; providing for private right of action and
for fines and penalties; further providing for administrative
penalties, for retaliation for action prohibited, for
availability of information and for funding; and imposing
penalties.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 2 of the act of October 13, 2010
(P.L.506, No.72), known as the Construction Workplace
Misclassification Act, is amended by adding definitions to read:
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:
* * *
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"Debar." As follows:
(1) Action taken by the secretary to prohibit a
contractor, subcontractor or person from contracting with or
participating in contracts for public work for a period of at
least three years.
(2) The debarment shall include all divisions or other
organizational elements of a contractor or subcontractor
unless limited by its terms to specific divisions or
organizational elements.
(3) The debarment may apply to affiliates or other
persons associated with the contractor, subcontractor or
individual if they are specifically named and given written
notice of the debarment and an opportunity to appeal.
(4) The debarment shall apply to a successor entity. An
entity shall be a successor entity if it:
(i) has one or more of the same principals or
officers as the employer against whom the order was
issued;
(ii) performs similar work within the same
geographical area;
(iii) occupies the same premises;
(iv) shares the same telephone number or facsimile
number;
(v) has the same email address or Internet website;
(vi) employs substantially the same workforce or
administrative employees, or both;
(vii) utilizes the same tools, equipment or
facilities;
(viii) employs or engages the services of any person
or persons involved in the direction or control of the
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other; or
(ix) lists substantially the same work experience.
* * *
"Public work." As defined in section 2(5) of the act of
August 15, 1961 (P.L.987, No.442), known as the Pennsylvania
Prevailing Wage Act.
* * *
Section 1.1. Section 3(a) of the act is amended and the
section is amended by adding a subsection 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.]
(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.
(a.1) Safe harbor.--Any of the following shall constitute
prima facie evidence that an individual is an independent
contractor under subsection (a):
(1) The individual has a written contract to perform
services in the construction industry and the contract is
project-specific and contains a particular scope of work.
(2) Evidence that an individual is registered as a
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contractor under the act of October 17, 2008 (P.L.1645,
No.132), known as the Home Improvement Consumer Protection
Act, at the time the individual performs services in the
construction industry.
(3) An affidavit by the individual, signed prior to the
time the individual performs services in the construction
industry, specifying that the individual understands and
agrees that the individual:
(i) is not an employee with regard to the services
in the construction industry;
(ii) is not entitled to benefits under the Workers'
Compensation Act if injured while performing services in
the construction industry;
(iii) may purchase workers' compensation insurance
under the Workers' Compensation Act or other disability
insurance at the individual's own expense;
(iv) is not entitled to benefits from the Uninsured
Employers Guaranty Fund if the individual is injured
while performing services in the construction industry;
and
(v) is considered to be self-employed for the
purposes of the Unemployment Compensation Law.
* * *
Section 2. Section 4(d) and (e) of the act are amended to
read:
Section 4. Improper classification of employees.
* * *
(d) Enforcement.--
(1) If, subsequent to issuing an order to show cause
under subsection (c), the secretary finds [probable cause
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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] that an employer has
failed to properly classify an individual as an employee for
the purposes of this act, the secretary shall impose
administrative penalties under section 6.
(2) In addition to imposing penalties under paragraph
(1), the secretary may refer the matter to the Attorney
General for criminal investigation. The secretary shall make
a referral if the employer has previously been found in
violation of this act in another matter. The Attorney General
has jurisdiction under section 5 to initiate an investigation
or prosecution of criminal violations of this act regardless
of whether a referral has been made.
(e) Acting in concert with other parties.--A party that does
not meet the definition of "employer" in section 2, but which
[intentionally] contracts or renews a contract with an employer
[knowing the employer intends to misclassify] to supply labor
for construction knowing the employer will misclassify the
supplied 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.
* * *
Section 3. Section 5(a) of the act is amended and the
section is amended by adding a subsection to read:
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.
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(2) A misdemeanor of the second degree for a second or
subsequent offense.] An employer, or officer or agent of an
employer, who knowingly violates section 4(a) commits:
(1) A misdemeanor of the first degree if the employer
has no prior offense under section 4(a).
(2) A felony of the third degree if the employer has one
or more prior offenses under section 4(a).
* * *
(d) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Prior offense." A conviction of a violation of section 4,
if the judgment of sentence was imposed before the defendant is
sentenced for a separate violation of section 4.
Section 4. The act is amended by adding sections to read:
Section 5.1. Private right of action.
(a) General rule.--An employee who has been misclassified in
violation of this act, or has been discharged, been threatened
or has otherwise suffered retaliation, discrimination or other
adverse action as a result of participating in an investigation
or reporting a violation of this act, may bring a private right
of action in a court of common pleas in accordance with
established civil procedures of this Commonwealth.
(b) Time.--An action under this section must be brought
within three years from the date that the employee knew of the
violation, retaliation or discrimination.
(c) Relief.--If an employee prevails in an action commenced
under this section, the employee shall be entitled to the
following relief:
(1) Reinstatement of the employee without a loss in
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seniority status, if applicable.
(2) Restitution equal to three times the amount of the
employee's wages and fringe benefits calculated from the date
of the violation, retaliation or discrimination.
(3) Reasonable attorney fees and costs of the action.
(4) Other legal and equitable relief the court deems
appropriate to make the employee whole.
Section 5.2. Fines and penalties.
In addition to other fines and penalties under this act, the
secretary may impose fines and penalties for violations under
this act.
Section 5. Sections 6(a) and 10(a) of the act are amended
and the sections are amended by adding subsections to read:
Section 6. Administrative penalties.
(a) General rule.--When the secretary finds that a person
has violated this act, the secretary [may assess]:
(1) Shall assess and collect [civil] administrative
penalties of not more than $1,000 for the first violation,
and not more than $2,500 for each subsequent violation.
(2) May order a financial audit or tax audit of any
relevant prospective records of the person.
* * *
(c) Intentional violation.--If the secretary determines that
a violation of this act was intentional, the secretary shall
debar, for a period of at least three years, a contractor,
subcontractor or person from bidding on or participating in a
public work project, which shall include grants and loans to
private entities that perform construction on behalf of a State
contract.
Section 10. Retaliation for action prohibited.
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(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.] discharge, threaten or otherwise
retaliate or discriminate in any manner against an employee
regarding compensation or other terms or conditions of
employment because the employee:
(1) participates in an investigation, hearing or inquiry
by the secretary or any governmental authority; or
(2) reports or makes a complaint regarding the violation
of this act to a construction industry employer or any
governmental authority.
(a.1) Action.--An employee who suffers retaliation or
discrimination in violation of this section may bring a private
right of action under section 5.1.
* * *
Section 6. Sections 11 and 17 of the act are amended to
read:
Section 11. Availability of information.
The department shall create a poster [for job sites] which
outlines the requirements and penalties under this act and shall
make the poster available on its Internet website. Every
employer subject to this act shall keep a summary of this act
and any regulations issued under this act applicable to the
employer, posted in a conspicuous place where employees normally
pass and can read it, both on job sites and in all places of
business. At the discretion of the secretary, a toll-free
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hotline telephone number may be established to receive alleged
violations.
Section 17. Funding.
(a) Enforcement.--The department shall not be required to
enforce this act until adequate funding is appropriated.
(b) Recovery of fees and costs.--The department, Office of
Attorney General or a district attorney's office shall be
entitled to recover attorney fees and costs associated with the
investigation of construction worker misclassification from
employers who violate the provisions of this act.
Section 7. This act shall take effect in 60 days.
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