The House Labor and Industry Committee approved legislation recently to strengthen a 2010 state law protecting construction workers from being misclassified as independent contractors.

The Democratic-controlled panel approved House Bill 721 by a 14-12 party-line vote with Democrats in favor and Republicans opposed.

HB721 sponsored by Rep. Kyle Donahue, D-Lackawanna, gives the state attorney general more power to investigate worker misclassification, allow misclassified workers to pursue a private right of action and increase penalties for violations of the Construction Workplace Misclassification Act.

The panel also voted 14-12 along party lines to reject an amendment by Committee Minority Chair Seth Grove, R-York, to repeal the act.

Donahue said misclassifying construction workers as independent contractors deprives them of salaries, benefits and protections such as unemployment compensation and workers’ compensation payments.

Such actions deprive Pennsylvania of millions of dollars of revenue in state income taxes and unemployment compensation taxes, he said.

HB721 addresses employers who intentionally misclassify construction workers, added Donahue. Despite doing the same work, misclassified workers receive fewer protections than properly classified workers, he said.

Grove said the 2010 law needs to be rewritten because it gives state agencies too much power. HB721 is not about helping employers comply with the law, he added.

“This is really going to hurt our smallest of businesses,” said Grove.

Democratic Gov. Josh Shapiro has called attention to this issue since taking office two years ago.

He obtained $1.2 million in the current state budget for Fiscal Year 2024-25 to improve labor law compliance in a number of areas by the state Department of Labor and Industry.