Galloway’s employee misclassification bill voted out of committee

HARRISBURG, June 4 – State Rep. John Galloway today announced that his bill (H.B. 716), which would establish a joint agency task force to address the misclassification of employees in Pennsylvania, was voted unanimously out of the House Labor and Industry Committee today.

“My bill would create a task force to prevent the misclassification of employees as independent contractors, which effectively robs the Commonwealth and workers of the pay and benefits they earned,” Galloway said.

Galloway said unethical employers often misclassify employees as independent contractors to save money. The practice both withholds the pay and benefits workers have earned and creates an uneven playing field for law-abiding businesses.

He said potential revenue loss due to misclassification of employees is significant. According to the Keystone Research Center, a misclassified worker loses an estimated $6,000 annually due to lost overtime pay. The center also estimates that Pennsylvania may be losing $10 million in unemployment taxes, at least $15 million in income tax revenues, as much as $83 million in workers’ compensation premiums and $200 million in federal income taxes. Misclassification can lower labor costs by as much as 30%.

The bill would amend the Administrative Code of 1929 to establish the Joint Agency Talk Force on the Misclassification of Employees. Members of the task force would include Pennsylvania’s attorney general; the secretaries of Community and Economic Development, General Services, Revenue and Budget; and the secretary of Labor and Industry, who would serve as chair.

The task force would examine the state's current classification and enforcement system and make recommendations to strengthen enforcement, as well as educate employers and the public about employee classification under the law.

The bill is on its way for consideration by the full House.