• H.B. 721 aims to curb misclassification in construction jobs

• Bill strengthens penalties and expands legal protections for workers

• Misclassification costs PA millions in lost taxes and benefits yearly

Legislation to crack down on the exploitation of construction workers through misclassification has passed the Pennsylvania House of Representatives, State Rep. Kyle Donahue, D-Lackawanna, announced. 

Donahue’s House Bill 721 would strengthen and expand the Construction Workplace Misclassification Act, originally enacted to combat the illegal practice of classifying employees as independent contractors to avoid paying benefits and protections guaranteed under state law, per a release. 

“Misclassification cheats workers out of wages, benefits, and critical protections like unemployment and workers’ compensation,” Donahue said in a statement. “These are the same hardworking individuals doing the same jobs as properly classified employees, but they are denied the rights they deserve. This legislation brings fairness and justice to those workers.” 

H.B. 721 now heads to the Pennsylvania Senate for consideration. 

The Keystone Research Center estimates that the misclassification of construction workers costs Pennsylvania taxpayers an estimated $83 million in lost workers’ compensation premiums, $47 million in unpaid state income taxes, and $11 million in unemployment compensation taxes annually. 

A report from the Joint Task Force on Misclassification of Employees found that nearly 11,000 misclassified workers in Pennsylvania were injured or became ill on the job and were denied workers’ compensation benefits in 2021 alone. The task force also reported $91 million in lost revenue to the state’s Unemployment Compensation Trust Fund. 

“This isn’t just about protecting workers – it’s about protecting taxpayers and leveling the playing field for law-abiding contractors,” Donahue said. “Construction jobs should be good, family-sustaining jobs. But when bad actors misclassify workers, everyone loses – except the dishonest employer.” 

House Bill 721 would implement several unanimous recommendations made by the task force and also takes steps to strengthen enforcement via the following: 

• Increase penalties on contractors who knowingly misclassify employees. 

• Empower the state Attorney General to investigate and prosecute cases of misclassification. 

• Allow misclassified employees to bring civil action against their employers. 

“With rising living costs and economic pressures, the last thing Pennsylvania workers should have to worry about is being robbed of their hard-earned wages and benefits,” Donahue said. “I urge my colleagues in the Senate to stand with workers and pass this important legislation.”