Pennsylvania Looks to Clean Up Worker Misclassification Act


The Pennsylvania Department of Labor & Industry and the U.S. Department of Labor Wage and Hour Division have signed a three-year Memorandum of Understanding to protect employees' rights by preventing their misclassification as independent contractors or other non-employee statuses. The two departments will work together to provide accessible outreach to employers, employees and other stakeholders, and conduct coordinated investigations, as well as share information and resources to increase enforcement of the misclassified worker law.

"When we share common interests and goals, increased collaboration and communication means we secure a better work environment for all Pennsylvania workers and employers," said Labor & Industry Secretary Kathy Manderino. "By educating employees and employers about compliance with all labor laws we enforce, we are helping everyone receive the benefits they deserve."

The U.S. DOL is working with the U.S. Internal Revenue Service and 31 other U.S. states to combat employee misclassification and to ensure that workers get the wages, benefits and protections to which they are entitled.

Misclassification of workers, or labeling employees as something they are not, such as independent contractors, can deny them basic rights such as minimum wage, overtime and other benefits. Misclassification also improperly lowers tax revenues to federal and state governments and creates losses for state unemployment insurance and workers' compensation funds. (“Misclassification of Employees as Independent Contractors.” DOL.gov. U.S. Department. of Labor, 2016. Web. 17 August 2016.)

In support of this MOU and as part of a grant from the federal government to its Unemployment Compensation Tax division, Labor & Industry will launch a statewide misclassified workers public awareness campaign in fall 2016.

Pennsylvania’s Act 72 of 2010 established criteria for independent contractors and implemented stiff penalties for employers who violate the criteria.