Pennsylvania Laborers Like New Law That Defines “Employees,” Pittsburgh Post-Gazette Reports

The Pittsburgh Post-Gazette reports that a new law defining who is an employee (versue independent contractor) is being greated enthusiastically by Pennsylvania workers:

“Union laborers are claiming victory now that Gov. Ed Rendell has signed a law aimed at curtailing construction companies’ ability to skirt taxes — and cut its own costs and liability — by labeling its workers independent contractors.

By classifying their workers as “independent contractors” instead of employees, companies can avoid paying unemployment compensation and workers’ compensation taxes.

Avoiding those taxes, according to labor groups, reduces employer costs and allows such companies to underbid contracting companies that are following the letter of the law.

The new law — formerly House Bill 400 and now Act 72 — is called the Construction Workplace Misclassification Act. Contracting companies that violate the act could be subject to fines and criminal prosecution. There’s also an “acting in concert” provision, which would penalize anyone who knowingly hires a contractor that is in violation of the act.

“It really will start to separate responsible contractors from irresponsible contractors,” said Jason Fincke, executive director of the Builders Guild of Western Pennsylvania, a labor management and contractor association group.

The point of the law isn’t to eliminate the use of independent contractors in the construction industry, he said.

“If there’s a service that you need that you don’t normally provide, you would get someone to do that for you,” Mr. Fincke said. “That’s a legitimate independent contractor.”

The law applies to the construction field only, to the regret of the Teamsters, who had hoped the law would be expanded to include truck drivers (and other kinds of workers) as well. The Teamsters have been fighting with Moon-based FedEx Ground, which classifies its drivers independent contractors. FedEx says its drivers are “small business owners” because they own their own equipment.”

To read the entire article go to Pittsburgh Post-Gazette.

1 Comment

Filed under Independent Contractor vs Employee, State Law Claims, Wage and Hour News

One response to “Pennsylvania Laborers Like New Law That Defines “Employees,” Pittsburgh Post-Gazette Reports

  1. ac53

    This blog post ignores another reality in this movement — that unions have a self-interest in abolishing the independent-contractor work status. For them, ICs do no good; they don’t generate union dues and they don’t bolster the unions’ power.

    I’m not saying there isn’t abuse of the IC work arrangement. I don’t even work in construction. But what’s happened with these unions’ zealous pursuit of this issue (combined with broke state governments seeking more money) is now starting to impact other industries of IC work.

    The reality, for the record, is the VAST MAJORITY of ICs are happily and willingly self-employed, not duped by greedy companies. I’ve been a self-employed graphic designer and writer for over 20 years. Many of my fellow ICs are seeing their work get shaky because companies are getting nervous about using their services for fear of IRS (or state) scrutiny. And don’t say they have nothing to fear if they’re innocent — with the IRS or state agencies (and especially under these new laws), you are guilty until proven innocent.

    So, before everyone is so quick to celebrate this “victory” for certain workers, I just wanted to let you know this having a negative effect on legitimate independent contractors who don’t have the lobbying muscle that unions do.

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