Galloway’s employee misclassification bill signed into law

HARRISBURG, Oct. 29 – 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, was signed into law today by Gov. Tom Wolf as Act 85 of 2020.

“I’m very glad this bill has been signed into law as it will help protect our workers from being exploited by unethical business practices,” Galloway said. “Some employers have taken advantage of loopholes to misclassify workers to deliberately cut labor costs, pay fewer tax dollars and avoid paying people a fair day’s wage for a fair day’s work. A misclassified worker also loses an estimated $6,000 in overtime pay due to this illegal practice.

“Our workers aren’t the only ones who are losing out. 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.

“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 act amends the Administrative Code of 1929 to establish the Joint Agency Task 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 will 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.