GovernorÂ RandellÂ signed the Pennsylvania Construction Workplace Misclassification Act into law, which is about to go into effect February 11, 2011. This act only applies to the misclassification of workers in the construction industry. All other industries would rely on common law tests.
Many contractors misclassify workers as independent contractors rather than employees in order to avoid carrying workers’ compensation and unemployment insurance. For workers who are misclassified as independent contractors, they may be wondering if they can bring a legal action against the employer.
Unfortunately, the Act does not allow private actions. Any violations of the Construction Workplace Misclassification Act could be reported to the Pennsylvania Department of Labor and Industry who would prosecute the case. Penalties includes stiff fines and even jail time. The employer can be liable for up to $1,000 per misclassified employee for the first violation and up to $2,500 per misclassified worker for each subsequent violation.
Employees who report that they are misclassified would be protected from retaliation and whistleblower laws. Any adverse action taken against a person within 90 days of a person reporting a violation created a rebuttable presumption of retaliation. If a worker is terminated for reporting the misclassification, they would then have a claim for a wrongful termination and the employer would then be liable for any loss of income the worker experiences as a result of the termination.
For contractors who conduct business with independent contractors, one of the requirements is that the relationship must be governed by a written contract. Be sure to include a provisions why both parties consider the relationship as an independent contractor relationship. An independent contractor must be a separate business which realizes a profit or loss, has its own location, and provides the essential tools for the job.
If you have been terminated for reporting your employer’s violation of the Act to the Pennsylvania Department of Labor and Industry, please contact me by calling (484) 362-9286.