Galloway’s employee misclassification bill headed to governor’s desk

HARRISBURG, Oct. 21 – State Rep. John Galloway announced that his H.B. 716, to establish a joint agency task force to address the misclassification of employees in Pennsylvania, unanimously passed the Senate today and awaits Gov. Tom Wolf’s action.

“A whole cottage industry has emerged to teach people how to break laws and misclassify workers as independent contractors,” he said. “By taking advantage of loopholes, employers deliberately cut labor costs, pay fewer tax dollars and avoid paying people a fair day’s wage for a fair day’s work.

“Pennsylvania also could be losing $200 million or more a year in federal income taxes, $10 million in unemployment taxes, at least $15 million in income tax revenues, and as much as $83 million in workers compensation premiums. A misclassified worker also loses an estimated $6,000 in overtime pay due to this illegal practice.

“What we’re talking about is money: More than anything else this is a revenue bill. We’re talking about recouping hundreds of millions of dollars lost every single year.”  

Galloway added that intentionally misclassifying employee labor also creates an uneven playing field, on which law-abiding businesses lose.

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; secretary of Labor and Industry (as chair); and the secretary of Revenue, in addition to individuals with experience in an industry affected by misclassification (four total with one appointed by each General Assembly caucus).

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.

“Twelve other states have employee misclassification task forces, and their success demonstrates that it’s an effective mitigation method,” Galloway said.