House passes Delloso bill to crack down on employer fraud

Rep. David M. Delloso    October 8, 2024 | 5:33 PM

HARRISBURG, Oct. 8 – State Rep. David M. Delloso, D-Delaware, announced today that the PA House voted in a bipartisan effort (116-85) to pass his legislation to prevent fraud and make sure employees are given the workplace benefits and protections they’ve rightly earned. The measure would crack down on employers that purposely misclassify workers – a move that would also save taxpayers millions of dollars.

Act 85 of 2020 ordered the Department of Labor & Industry to form a task force to study and compile a report on the practice of employers misclassifying employees as “independent contractors” in order to rob them of the protections and benefits owed to employees. The Joint Task Force on Misclassification of Employees delivered that report in March of 2022 – including 15 recommendations to the General Assembly on how to tackle the problem. Among them was to create an interagency working group to take on the duty of overseeing the actions they proposed.

Delloso’s legislation (H.B. 2412) would follow through on that recommendation by establishing the Employee Misclassification Working Group to coordinate enforcement strategies involving state agencies. It would also authorize the state Department of Labor & Industry and the state Department of Revenue to share data to better investigate employee misclassification –and to aid in that process, would require state agency business applications to include and use a federal employer ID number to ensure the efficient exchange of state tax information.

“Cheating employees and taxpayers is not the way a good, responsible business cuts costs. As elected officials, we cannot ignore any type of injustice plaguing working people in this Commonwealth,” Delloso said. “Employee misclassification is a scourge that harms every citizen who lives and works here. Creating a group devoted to stopping it is the logical response. Dishonest employers must be put on notice that exploiting Pennsylvanians is not going to turn out well for them.”

 

Statistics compiled by the task force that illustrate the severity of the problem include*:

  • 5.3: Average number of misclassified employees found per employer.
  • 48,939: Annual number of employers who currently misclassify at least one employee.
  • 259,000: Annual number of misclassified employees in Pennsylvania.
  • 10,892: Estimated number of misclassified employees who suffered injury or illness at work and were denied Workers’ Compensation in 2021.
  • $6.4 million to $124.5 million: Estimated annual range of lost revenue to the state’s General Fund due to misclassification.
  • $153,365,895: Estimated losses to misclassified employees who suffered injury or illness at work in 2021 without workers’ compensation insurance.

*Source: Office of Unemployment Compensation Tax Services audit based on data collected from 2020Q3-2022Q2