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FOR IMMEDIATE RELEASE |
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State
Rep. Bryan Lentz |
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Lentz to introduce bill protecting employees, competing businesses
HARRISBURG, Jan. 8 – Employers who intentionally misclassify employees as independent contractors to save money and avoid taxes would be subject to strict penalties under legislation state Rep. Bryan R. Lentz, D-Delaware, plans to introduce.
Lentz said the intentional misclassification of workers as independent contractors has been on the rise in recent years, particularly in the construction and motor-carrier industries. Employers use a variety of schemes to avoid paying workers’ compensation, unemployment insurance, overtime and other benefits to employees in order to reduce company operating costs. The misclassification of employees results in a loss of revenue by local, state and federal governments that forces honest employers to pay a heavier tax burden to offset the revenues losses.
“This tactic gives these employers an unfair advantage over legitimate and honest employers who comply with state and federal employment requirements,” Lentz said. “Many of these same employers subvert the system by hiring and using illegal workers on projects, thereby keeping costs very low and putting legitimate workers at a disadvantage. My legislation would put everyone on a level playing field when bidding for contracts, and also protect employees from being cheated out of their due compensation.”
Lentz’s legislation would establish the “Workers’ Compensation Independent Contractor Act,” which would consider a person who performs services in the construction or commercial-carrier industries to be an employee unless the Department of Labor and Industry determines that the worker is legitimately an independent contractor.
A Harvard University study estimates that Massachusetts is losing roughly $12.6 million to $25 million a year in unemployment insurance premiums and nearly $91 million to $152 million in income taxes through the misclassification of employees as independent contractors. A recent Cornell University study determined that New York state is losing up to $176 million a year just in unemployment insurance premiums due to the practice.