Regular Session 2023-2024 House Bill 1751 P.N. 2324

PRIOR PRINTER'S NO. 2120

PRINTER'S NO. 2324

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1751

Session of

2023

INTRODUCED BY DONAHUE, KAZEEM, MADDEN, PIELLI, McNEILL,

HOHENSTEIN, SCHLOSSBERG, BRENNAN, DELLOSO, HADDOCK, OTTEN,

GIRAL, SANCHEZ, HILL-EVANS, BOYD, CIRESI, NEILSON, STEELE,

FIEDLER, DALEY, KRAJEWSKI, CERRATO AND KHAN, OCTOBER 13, 2023

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,

NOVEMBER 15, 2023

AN ACT

Amending the act of October 13, 2010 (P.L.506, No.72), entitled

"An act providing for the criteria for independent

contractors in the construction industry and for the powers

and duties of the Department of Labor and Industry and the

Secretary of Labor and Industry; and imposing penalties,"

further providing for definitions, for improper

classification of employees and for criminal penalties;

providing for private right of action and for fines and

penalties; further providing for administrative penalties,

for retaliation for action prohibited, for availability of

information, FOR USE OF PENALTY FUNDS and for funding; and

imposing penalties.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 2 of the act of October 13, 2010

(P.L.506, No.72), known as the Construction Workplace

Misclassification Act, is amended by adding definitions to read:

Section 2. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

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* * *

"Debar." As follows:

(1) Action taken by the secretary to prohibit a

contractor, subcontractor or person from contracting with or

participating in contracts for public work for a period of at

least three years.

(2) The debarment shall include all divisions or other

organizational elements of a contractor or subcontractor

unless limited by its terms to specific divisions or

organizational elements.

(3) The debarment may apply to affiliates or other

persons associated with the contractor, subcontractor or

individual PERSON if they are specifically named and given

written notice of the debarment and an opportunity to appeal.

(4) The debarment shall apply to a successor entity. An

entity shall be a successor entity if it:

(i) has one or more of the same principals or

officers as the employer against whom the order was

issued;

(ii) performs similar work within the same

geographical area;

(iii) occupies the same premises;

(iv) shares the same telephone number or facsimile

number;

(v) has the same email address or Internet website;

(vi) employs substantially the same workforce or

administrative employees, or both;

(vii) utilizes the same tools, equipment or

facilities;

(viii) employs or engages the services of any person

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or persons involved in the direction or control of the

other; or

(ix) lists substantially the same work experience.

* * *

"Public work." As defined in section 2(5) of the act of

August 15, 1961 (P.L.987, No.442), known as the Pennsylvania

Prevailing Wage Act.

* * *

Section 2. Section 4(d) and (e) of the act are amended to

read:

Section 4. Improper classification of employees.

* * *

(d) Enforcement.--

(1) If, subsequent to issuing an order to show cause

under subsection (c), the secretary finds [probable cause

that an employer has committed a criminal violation of this

act, the secretary shall refer the matter to the Office of

Attorney General for investigation or] that an employer has

failed to properly classify an individual as an employee for

the purposes of this act, the secretary shall impose

administrative penalties under section 6.

(2) In addition to imposing penalties under paragraph

(1), the secretary may refer the matter to the Attorney

General for criminal investigation. The secretary shall make

a referral if the employer has previously been found in

violation of this act in another matter. The Attorney General

has jurisdiction under section 5 to initiate an investigation

or prosecution of criminal violations of this act regardless

of whether a referral has been made.

(e) Acting in concert with other parties.--A party that does

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not meet the definition of "employer" in section 2, but which

[intentionally] contracts or renews a contract with an employer

[knowing the employer intends to misclassify] to supply labor

for construction knowing the employer will misclassify the

supplied employees in violation of this act, shall be subject to

the same penalties, remedies or other actions as the employer

found to be in violation of this act.

* * *

Section 3. Section 5(a) of the act is amended and the

section is amended by adding a subsection to read:

Section 5. Criminal penalties.

(a) Grading.--[An employer, or officer or agent of an

employer, that intentionally violates section 4(a) commits:

(1) A misdemeanor of the third degree for a first

offense.

(2) A misdemeanor of the second degree for a second or

subsequent offense.] An employer, or officer or agent of an

employer, who knowingly violates section 4(a) commits:

(1) A misdemeanor of the first degree if the employer

has no prior offense under section 4(a).

(2) A felony of the third degree if the employer has one

or more prior offenses under section 4(a).

* * *

(d) Definitions.--As used in this section, the following

words and phrases shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

"Prior offense." A conviction of a violation of section 4,

if the judgment of sentence was imposed before the defendant is

sentenced for a separate violation of section 4.

Section 4. The act is amended by adding sections A SECTION

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to read:

Section 5.1. Private right of action.

(a) General rule.--An employee who has been misclassified in

violation of this act, or has been discharged, been threatened

or has otherwise suffered retaliation, discrimination or other

adverse action as a result of participating in an investigation

or reporting a violation of this act, may bring a private right

of action in a court of common pleas in accordance with

established civil procedures of this Commonwealth.

(b) Time.--An action under this section must be brought

within three years from the date that the employee knew of the

violation, retaliation or discrimination.

under this section, the employee shall be entitled to the

following relief:

(1) Reinstatement of the employee without a loss in

seniority status, if applicable.

(2) Restitution equal to three times the amount of the

employee's wages and fringe benefits calculated from the date

of the violation, retaliation or discrimination.

(3) Reasonable attorney fees and costs of the action.

(4) Other legal and equitable relief the court deems

appropriate to make the employee whole.

Section 5.2. Fines and penalties.

In addition to other fines and penalties under this act, the

secretary may impose fines and penalties for violations under

this act.

Section 5. Sections 6(a) and 10(a) of the act are amended

and the sections are amended by adding subsections to read:

Section 6. Administrative penalties.

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(a) General rule.--When the secretary finds that a person

has violated this act, the secretary [may assess]:

(1) Shall assess and collect [civil] administrative

penalties of not more than $1,000 for the first violation,

and not more than $2,500 for each subsequent violation.

(2) May order a financial audit or tax audit of any

relevant prospective records of the person.

* * *

(1) IF THE SECRETARY DETERMINES THAT a violation of this

act was intentional, the secretary shall debar, for a period

of at least three years, a contractor, subcontractor or

person from bidding on or participating in a public work

project, which shall include grants and loans to private

entities that perform construction on behalf of a State

contract.

(2) A DEBARMENT UNDER PARAGRAPH (1) SHALL APPLY TO THE

FOLLOWING:

(I) FUTURE PROJECTS AND CONTRACTS NOT BEGUN OR

ENTERED INTO ON OR BEFORE THE DATE OF THE DEBARMENT.

(II) CURRENT PROJECTS AND CONTRACTS ALREADY ENTERED

INTO BUT ON WHICH THE DEBARRED CONTRACTOR, SUBCONTRACTOR

OR PERSON HAS NOT BEGUN WORK AS OF THE DATE OF THE

DEBARMENT.

Section 10. Retaliation for action prohibited.

(a) General rule.--It shall be unlawful for an employer, or

officer or agent of an employer, to [discriminate in any manner

or take adverse action against any person in retaliation for

exercising rights protected under this act. Rights protected

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under this act include, but are not limited to, the right to

file a complaint or inform any person about an employer's

noncompliance with this act.] discharge, threaten or otherwise

retaliate or discriminate in any manner against an employee

regarding compensation or other terms or conditions of

employment because the employee:

(1) participates in an investigation, hearing or inquiry

by the secretary or any governmental authority; or

(2) reports or makes a complaint regarding the violation

of this act to a construction industry employer or any

governmental authority.

(a.1) Action.--An employee who suffers retaliation or

discrimination in violation of this section may bring a private

right of action under section 5.1.

* * *

Section 6. Sections 11, 12 and 17 of the act are amended to

read:

Section 11. Availability of information.

The department shall create a poster [for job sites] which

outlines the requirements and penalties under this act and shall

make the poster available on its Internet website. Every

employer subject to this act shall keep a summary of this act

and any regulations issued under this act applicable to the

employer, posted in a conspicuous place where employees normally

pass and can read it, both on job sites and in all places of

business. At the discretion of the secretary, a toll-free

hotline telephone number may be established to receive alleged

violations.

SECTION 12. USE OF PENALTY FUNDS AND RECOVERED FEES AND COSTS.

[ANY SUM COLLECTED AS A PENALTY UNDER:

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(1) SECTIONS 6, 7 AND 9 FOR A VIOLATION OF SECTION 4(A)

(1) SHALL BE PAID INTO THE WORKERS' COMPENSATION

ADMINISTRATION FUND.

(2) SECTIONS 6, 7 AND 9 FOR A VIOLATION OF SECTION 4(A)

(2) SHALL BE PAID INTO THE SPECIAL ADMINISTRATION FUND

CREATED UNDER SECTION 601.1 OF THE UNEMPLOYMENT COMPENSATION

LAW.

(3) SECTION 9 FOR A VIOLATION OF ANY OTHER PROVISION OF

THIS ACT SHALL BE DIVIDED EQUALLY BETWEEN THE WORKERS'

COMPENSATION ADMINISTRATION FUND AND THE SPECIAL

ADMINISTRATION FUND.] NOTWITHSTANDING ANY OTHER PROVISION OF

LAW TO THE CONTRARY, ANY SUM COLLECTED AS A PENALTY,

RECOVERED ATTORNEY FEE OR COST ASSOCIATED WITH ANY

INVESTIGATION OR ENFORCEMENT ACTION UNDER THIS ACT SHALL BE

DEPOSITED INTO A RESTRICTED REVENUE ACCOUNT CREATED IN THE

GENERAL FUND. MONEY DEPOSITED INTO THE RESTRICTED REVENUE

ACCOUNT IS APPROPRIATED TO THE DEPARTMENT AND SHALL BE USED

FOR FUTURE ENFORCEMENT OF THIS ACT.

Section 17. Funding.

(a) Enforcement.--The department shall not be required to

enforce this act until adequate funding is appropriated.

(b) Recovery of fees and costs.--The department, Office of

Attorney General or a district attorney's office shall be

entitled to recover attorney fees and costs associated with the

investigation of construction worker misclassification , ALONG

WITH ANY RESULTING ENFORCEMENT ACTION, from employers who

violate the provisions of this act.

Section 7. This act shall take effect in 60 days.

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