By Nancy Walker
In October of last year, a 17-year-old child employed by a Georgia-based contractor fell 24 feet from a home improvement store’s roof in New Castle, Pa, – a roof on which he should have never been working.
Fortunately, the child suffered only minor injuries and recovered. But because of this near-disaster, labor law investigators from both the state and the federal government began the work of untangling how something like this could happen.
What the Pennsylvania Department of Labor & Industry and the federal Department of Labor found was sadly routine. Not only had JVS Roofing LLC violated the Pennsylvania Child Labor Act, the contractor had also misclassified nine other workers as independent contractors in violation of Pennsylvania’s Construction Workplace Misclassification Act (Act 72).
Last week, L&I announced the successful collection of a $22,150 fine from JVS for its violations. In addition to L&I’s enforcement action, the United States Department of Labor (USDOL) collected $6,399 in fines against JVS under child labor provisions contained within the federal Fair Labor Standards Act and $92,640 in backpay for workers who were misclassified as independent contractors.
Misclassification is a complex issue, but it boils down to this relatively simple concept: we have laws that require employers to offer benefits that protect workers who are injured on the job or lose their job through no fault of their own. These benefits come with costs.
When an employer chooses to sidestep those costs by misclassifying its workers as independent contractors, they save money, but workers – and the law-abiding businesses competing for lowest-bidder projects – suffer the consequences.
In his recent column for City & State, the executive secretary-treasurer for the Eastern Atlantic States Regional Council of Carpenters William C. Sproule called worker misclassification “a symptom of an illegal business model that cuts corners, pays low wages, fails to play by the rules and is willing to risk workers’ lives.” He said it’s time to hold these types of employers accountable.
I couldn’t agree more with Mr. Sproule.
My department, under the leadership of Gov. Josh Shapiro, is committed to tackling the crisis of worker misclassification.
Within the first three months of his administration, Gov. Shapiro joined with New Jersey Gov. Phil Murphy to form an interstate task force to address wage theft and worker misclassification in the two states.
Additionally, Gov. Shapiro’s budget proposes hiring more L&I labor law investigators to further protect Pennsylvania’s workers – including construction employees who are routinely exploited by contractors looking to cut corners despite the explicit protections in Act 72.
Currently, L&I has 27 investigators to cover all 67 counties in Pennsylvania and enforce 13 laws. They are a tenacious group committed entirely to the cause of protecting workers and holding employers accountable to our labor laws. Simply put, we need more of them.
Since 2011, L&I has cited 927 construction contractors for violations of Act 72 and collected more than $3 million in fines. Just last year, the department issued penalties to more than 125 construction-industry employers and collected $272,965 in fines.
We know these violations represent a drop in the bucket compared to the true epidemic of worker misclassification across Pennsylvania. Far too much of it is perpetrated by contractors based outside of Pennsylvania who think they can scoop up lucrative contracts, exploit our workers and return to their home base before anyone notices.
Enough is enough.
Last year, the Joint Task Force on Misclassification of Employees – a bipartisan group of volunteers representing business, labor, and government perspectives – submitted its final report to the General Assembly, which concluded that nearly 49,000 employers misclassify at least one employee annually and that about 259,000 Pennsylvania employees are misclassified each year.
As Mr. Sproule correctly pointed out, 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.
In my former role as chief of Fair Labor Section created by then-Attorney General Shapiro, I served on that Task Force. I heard the stories of workers placed in dangerous situations by unscrupulous employers and businesses that struggle to compete with companies that exploit workers, but also examples of effective enforcement against these types of violations.
Just as important as our role in enforcing Act 72 is our role in educating the public about worker misclassification – especially workers in dangerous jobs that can fluctuate dramatically amid changing economic conditions.
I want construction employees to know they have a right to Unemployment Compensation benefits and workers’ compensation insurance coverage.
I want unscrupulous construction employers to know this: the days of flying under the radar are over. We are watching.
Nancy Walker is the acting secretary of the Pennsylvania Department of Labor & Industry. She writes from Harrisburg.
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