Outdated policy costs PA workers millions in lost revenue
When app-based companies like Uber and DoorDash label their workers as contractors rather than employees, it doesn't just strip the worker of certain rights, it actually hurts you — the consumer — too.
It's called misclassification, and when companies do it, they deprive workers of wage, workplace health and safety, and unemployment protections and benefits under Pennsylvania law. This means workers are missing out on millions of dollars in wages; they are footing medical bills following a workplace injury; and they are denied unemployment compensation.
We lose too. According to the state Department of Revenue, in 2019 worker misclassification cost Pennsylvania taxpayers between $6.4 million and $124.5 million in lost revenue. That is a lot of funding that could have gone to supporting schools, repairing bridges or providing more tax relief for our seniors.
Law-abiding businesses are hurt too, because they miss out on opportunities to grow and compete when bidding for projects.
Worker misclassification isn't just an issue in the gig economy. It is a problem in a variety of industries from construction to health care to online business. And it's widespread across the commonwealth — in 2020 and 2021 nearly 50,000 employers misclassified nearly 400,000 workers.
Whether a company is misclassifying one worker or 100, this is cheating the worker and the system. Companies are cheating and using this scheme to get rich at the expense of their workers and law-abiding employers. It is unfair and unethical, but there are legislative fixes.
We have introduced a bill to begin to level the playing field for all businesses and, in turn, build a better Pennsylvania with better jobs, better roads, better bridges and better infrastructure for everyone.
A 2022 report from the Joint Task Force on Misclassification of Employees, which was created under a bill we authored in 2020, provides an outline for action. The report was informed by dozens of experts, including other states, like New Jersey and Virginia, that have tackled this issue already. Our bill (H.B. 2810) is based on the task force recommendations.
Our comprehensive plan would:
Extend Act 72, the Construction Workplace Misclassification Act, to cover industries beyond the construction trades in Pennsylvania.
Expand statewide clearance programs to require all state agencies to pull current licenses or not renew current licenses if a business is determined to have knowingly misclassified workers and not paid the fines and fees associated with that violation or previous violations.
Boost penalties associated with worker misclassification violations by increasing the fines in tiers for first, second and subsequent violations, and by enhancing criminal penalties for known violations while maintaining summary offenses for negligent violations.
Bolster specialty and support staff at the state Department of Labor and Industry to investigate instances of misclassification.
More:Corporations exploit workers even amid COVID. They don't deserve to run the economy: Sherrod Brown
Democrats have long supported Pennsylvania workers. We will continue to stand and partner with them to ensure a fair day's work earns a fair day's pay and the protections that should accompany it. Worker misclassification deprives workers of compensation, security, and rights and it has gone on long enough. It is time to act on the well-crafted recommendations of last year's joint task force and protect our workers, our law-abiding businesses and all Pennsylvanians.
State Rep. John Galloway, D-140th Dist., represents a portion of Bucks County. Rep. Joanna McClinton, D-191st Dist., represents portions of Philadelphia and Delaware counties. Rep. Pat Harkins, D-1st Dist., represents Erie.
This article originally appeared on Erie Times-News: Misclassifying workers as contractors costs millions in revenue.
