Eastern Atlantic States Regional Council of Carpenters hosted the Pennsylvania House Democratic Policy Committee’s Subcommittee on Labor, Energy, and Development on January 27th to discuss the issues of wage theft, worker misclassification, and construction industry tax fraud in Pittsburgh. Testimony was provided by Eastern Atlantic States Regional Council of Carpenters Regional Manager Drew Simpson on the recommendations made by the Joint Task Force on the Misclassification of Employees, of which he was an appointed member.
Misclassification of workers is defined as the act of an employer refusing to hire an employee and instead using the worker as an independent contractor, thereby allowing the employer to avoid paying state, local, and federal taxes and also skirting workers’ compensation and unemployment compensation premiums.
“We have an entire class of workers being victimized,” said Simpson. “I wish I could say it was as simple as just registering labor brokers, increasing enforcement, or providing misclassified employees with a private right of action.”
The Joint Task Force on the Misclassification of Employees found misclassification resulted in an annual loss of $91 million to Pennsylvania’s Unemployment Compensation Trust Fund.
“The lost revenue is astronomical, and the lost protections, including health insurance, is sickening – not to mention devastating to our workers and their families,” Chairman Nick Pisciottano said. “We heard the practice described as insurance fraud, a crime that hurts all Pennsylvania families and workers since it shortchanges every taxpaying resident.”
“The widespread illegal practice of misclassification happening throughout Pennsylvania is not limited to just construction workers,” said State Representative Anita Kulik. “Sadly, we heard how this illegal practice is not only robbing workers of wages and protections, but it also passes tax burdens onto law-abiding employers and employees throughout the state.”
Over $153 million is estimated to have been lost by workers in 2021 who suffered injury or illness but were denied protections they deserved and earned.
“The only way to protect those who can’t speak for themselves is to take on misclassification from every angle and use every tool at our disposal,” said Simpson.
You can read Regional Manager Simpson’s full testimony below.