Labor & Industry Secretary Joins Eastern Atlantic States Regional Council of Carpenters to Call for End to Worker Misclassification

​Contact: Trevor Monk, [email protected]

Harrisburg, PA - Pennsylvania Department of Labor & Industry (L&I) Secretary Nancy A. Walker today joined a bipartisan group of Pennsylvania lawmakers and the Eastern Atlantic States Regional Council of Carpenters to highlight the Shapiro Administration's efforts to tackle worker misclassification in Pennsylvania, protect working people and taxpayers and foster a level playing field for law-abiding contractors.

Governor Josh Shapiro has urged the General Assembly to pass his proposed 2024-25 budget that invests $1.2 million in L&I's Bureau of Labor Law Compliance, which enforces 13 Pennsylvania labor laws. L&I would use those funds to hire an additional 12 labor law compliance investigators, bringing the bureau's complement to 39 investigators responsible for enforcing labor laws across the Commonwealth's 67 counties.

"To be blunt, we need more resources to combat worker misclassification in Pennsylvania. With just 70 percent of Pennsylvania's population, New Jersey has 70 labor law investigators and plans to add 10 more," Secretary Walker said. "This is an issue that affects every Pennsylvanian in one way or another, and the Shapiro Administration is fully committed to bringing the bad actors into compliance - but we need boots on the ground to do it."

Worker misclassification occurs when an employer wrongly classifies a worker as an independent contractor instead of an employee, denying workers essential rights and benefits employees are entitled to. This practice also harms taxpayers because bad-actor employers use misclassification to avoid paying state and local taxes.

For example, L&I's Office of Unemployment Compensation Tax Services conducted 3,235 audits in 2023 and found $4.3 million in underreported UC taxes due to worker misclassification.

Act 72 - one of the 13 labor laws enforced by L&I -- specifically protects construction employees from losing protections and benefits which occurs when employers misclassify construction employees as independent contractors. Construction employers who follow the rules are also harmed by misclassification because they lose out on contracts to Act 72 violators who take illegal shortcuts on labor costs. In 2023, L&I collected about $414,000 from 138 employers who misclassified 712 employees.

The Shapiro Administration supports the recommendations of the Joint Task Force on Misclassification of Employees - a bipartisan group of volunteers representing business, labor, and government perspectives - that concluded in a 2022 report to the General Assembly that nearly 49,000 employers misclassify at least one employee annually and that about 259,000 Pennsylvania employees are misclassified each year.

The Task Force also found that such misclassification results in an annual loss of $91 million to Pennsylvania's Unemployment Compensation Trust Fund. For individual workers who suffer injury or illness on the job, the costs add up to more than $153 million in lost workers' compensation insurance coverage.

How to Submit a Complaint

L&I urges employers to familiarize themselves with Pennsylvania's Construction Workplace Misclassification Act to ensure they are in full compliance.

L&I's Bureau of Labor Law Compliance responds to complaints filed by members of the public who suspect violations of the Construction Workplace Misclassification Act and other Pennsylvania labor laws. Anyone can file a complaint on L&I's website using an online submission form.

For more information on misclassified workers or if you feel you, or someone you know, may be misclassified, visit L&I's page on misclassified workers.

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