Galloway Introduces Bill to Stop Wage Theft
State Reps John Galloway,( D-Bucks) along with, Joanna McClinton, D-Phila./Delaware, and Pat Harkins, D-Erie, announced last week their introduction of H.B. 2810 to stop wage theft in Pennsylvania.
The bill is based on recommendations from a 2022 report from the Joint Task Force on Misclassification of Employees, which was created under a bill authored in 2020.
Galloway earlier this year, made recommendations to the task force earlier this year.
Misclassification of employees occurs when a business wrongfully classifies a worker as an independent contractor even though the nature, type and oversight of their work determines they should be considered an employee under the law, he said.
The report found that by misclassifying employees as “contractors” the workers are deprived of wages, workplace health and safety, and unemployment protections. It amounts to tax fraud and costs the commonwealth millions of dollars in lost revenue annually. Misclassification can impact industries from home health care to construction to online businesses, like Uber and Lyft drivers.
“For years, I’ve been fighting to end corporate price gouging on workers in the commonwealth,” Galloway said. “Too many companies are cooking the books and using dirty tricks to take money out of the hands of workers and put it into stock buybacks, shareholder dividends, and corporate executive perks instead of putting the money back into the communities. When HB 2810 is passed, Pennsylvania’s workers will have the wages and the workplace protections they rightfully deserve, and our working families and communities will be safer and stronger for it.”
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. In 2020 and 2021, nearly 50,000 employers misclassified nearly 400,000 workers in Pennsylvania.
“Employee misclassification is stealing from workers. It is stealing their fair wages, workplace health, safety and unemployment protections, and benefits under Pennsylvania law,” McClinton said. “Workers in the gig economy—everyone from DoorDash drivers to IT workers, construction workers and home healthcare providers—are being shortchanged of their benefits and salaries creating a financially vulnerable workforce. Additionally, misclassification has deprived the commonwealth of funding that could have gone to supporting schools, repairing bridges or providing more tax relief for our seniors.”
“Whether a company is misclassifying 1 worker or 100, they are cheating the worker and the system,” Harkins added. “Wage theft hurts law abiding companies that are playing by the rules and so are losing out on contracts to companies hiring less qualified workers for less pay. This bill will 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.”
The bill would:
- Cover all workers to protect them from wage theft.
- Take away the licenses of businesses who steal wages and cheat the system.
- Give the Department of Labor and Industry more resources to chase down the cheaters.
- Make cheaters face heavy fines – the companies who made an honest mistake will get a chance to make things right, but the ones who knowingly steal from workers will get hit the hardest.
- Align with the effort to end corporate price gouging and give the attorney general more power to investigate and charge companies taking advantage of the system.
“We will continue to stand and partner with Pennsylvania’s workers to ensure a fair day’s work earns a fair day’s pay and the protections that should accompany it,” Galloway said.
“Criminals use employee misclassification to get rich in Pennsylvania at the expense of the financially vulnerable and the law abiding,” Galloway said. “I hope the legislature will adopt the proposals to end this unfair and unethical practice, which is currently bleeding the state dry so that we can build a better Pennsylvania with better jobs, better roads, better bridges and better infrastructure for everyone,” he said earlier this year when the report was released.
The measure was referred to the House Committee on Labor and Industry for consideration.