Misclassification ... learn more about it ...


MISCLASSIFICATION remains a topic of concern in the UNION construction industry. 

What can contractors do to try to stop it when they see an OPEN SHOP CONTRACTOR improperly misclassifying an employee as an independent contractor ???

MISCLASSIFICATION CONST WORKER MISCLASSIFICATION ACT (click here to read about ACT 72) is illegal.   In 2010 IFCA partnered with the carpenters to create ACT 72 which became law Feb. 20, 2011.  It established a definition for “independent contractor” for purposes of workers’ compensation, unemployment compensation and worker classification. 

Act 72 contains a narrow definition of “independent contractor.”  It says … an individual may not be classified as an independent contractor unless the individual:

  1. Has a written contract to perform construction services with the business or person;

  2. Is free from control or direction over the performance of these services; and

  3. Is customarily engaged in an independently established trade, occupation, profession or business.

Further, an individual is “customarily engaged in an independently established trade, occupation, profession or business” only if:

  • The individual possesses the essential tools to perform the services independent of the business for which the services are performed.

  • The individual must realize a profit or suffer a loss for the project.

  • The individual must have a proprietary interest in their business.

  • The individual must have a business location separate from the business or person for whom the services are being performed.

  • The individual independently performed the same services for another person, or was available and able to independently perform these services for another person and represented that these services could be independently performed for another person.

  • The individual must maintain liability insurance of at least $50,000 during the term of the contract.

You know that MISCLASSIFICATION is illegal.  What you might not know is that each individual misclassification by an employer is a separate violation of the law.  Further, following the filing of charges and a possible hearing, the PA DOL may also assess civil penalties up to $1,000 for the first violation and up to $2,500 for each subsequent violation, seek a stop-work order and pursue criminal prosecution.

What can you do to help ???

The PA Department of Labor & Industry (PA DOL) provides a form that can be completed online (note that you only need to fill it out partially, if you don’t possess all of the details, to start an investigation) to indicate when an employer has misclassified an employee.  This “worker misclassification inquiry” will begin the process of alerting the government to a potential misclassification.  

If you notice that someone is being misclassified on a job site, use this link to report it: 


You should also check out this llink ... a web site created by the carpenters ... it's loaded with great information about MISCLASSIFICATION ... http://stoptaxfraud.net/.