HB 721 — An Act amending the act of October 13, 2010 (P.L.506, No.72), known as the Construction Workplace Misclassification Act, further providing for definitions, for improper classification of employees and for criminal penalties; providing for private right of action; 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.

PRINTER'S NO.   742

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 721
                                                Session of
                                                  2025

     INTRODUCED BY DONAHUE, PROKOPIAK, SANCHEZ, FREEMAN, PROBST,
        PIELLI, RABB, BRENNAN, GIRAL, SCHLOSSBERG, HADDOCK, NEILSON,
        WARREN, GALLAGHER, CERRATO AND MALAGARI, FEBRUARY 25, 2025

     REFERRED TO COMMITTEE ON LABOR AND INDUSTRY, FEBRUARY 25, 2025


                                     AN ACT
 1   Amending the act of October 13, 2010 (P.L.506, No.72), entitled
 2      "An act providing for the criteria for independent
 3      contractors in the construction industry and for the powers
 4      and duties of the Department of Labor and Industry and the
 5      Secretary of Labor and Industry; and imposing penalties,"
 6      further providing for definitions, for improper
 7      classification of employees and for criminal penalties;
 8      providing for private right of action; further providing for
 9      administrative penalties, for retaliation for action
10      prohibited, for availability of information, for use of
11      penalty funds and for funding; and imposing penalties.
12      The General Assembly of the Commonwealth of Pennsylvania
13   hereby enacts as follows:
14      Section 1.    Section 2 of the act of October 13, 2010
15   (P.L.506, No.72), known as the Construction Workplace
16   Misclassification Act, is amended by adding definitions to read:
17   Section 2.    Definitions.
18      The following words and phrases when used in this act shall
19   have the meanings given to them in this section unless the
20   context clearly indicates otherwise:
21      * * *
22      "Debar."     Action taken by the secretary to prohibit a
 1   contractor, subcontractor or person from contracting with or
 2   participating in contracts for public work for a period of at
 3   least three years.
 4      * * *
 5      "Public work."     As defined in section 2(5) of the act of
 6   August 15, 1961 (P.L.987, No.442), known as the Pennsylvania
 7   Prevailing Wage Act.
 8      * * *
 9      Section 2.     Section 4(d) and (e) of the act are amended to
10   read:
11   Section 4.     Improper classification of employees.
12      * * *
13      (d)   Enforcement.--
14            (1)   If, subsequent to issuing an order to show cause
15      under subsection (c), the secretary finds [probable cause
16      that an employer has committed a criminal violation of this
17      act, the secretary shall refer the matter to the Office of
18      Attorney General for investigation or] that an employer has
19      failed to properly classify an individual as an employee for
20      the purposes of this act, the secretary shall impose
21      administrative penalties under section 6.
22            (2)   In addition to imposing penalties under paragraph
23      (1), the secretary may refer the matter to the Attorney
24      General for criminal investigation. The secretary shall make
25      a referral if the employer has previously been found in
26      violation of this act in another matter. The Attorney General
27      has jurisdiction under section 5 to initiate an investigation
28      or prosecution of criminal violations of this act regardless
29      of whether a referral has been made.
30      (e)   Acting in concert with other parties.--A party that does

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 1   not meet the definition of "employer" in section 2, but which
 2   [intentionally] contracts or renews a contract with an employer
 3   [knowing the employer intends to misclassify] to supply labor
 4   for construction knowing the employer will misclassify the
 5   supplied employees in violation of this act, shall be subject to
 6   the same penalties, remedies or other actions as the employer
 7   found to be in violation of this act.
 8      * * *
 9      Section 3.     Section 5(a) of the act is amended and the
10   section is amended by adding a subsection to read:
11   Section 5.     Criminal penalties.
12      (a)   Grading.--[An employer, or officer or agent of an
13   employer, that intentionally violates section 4(a) commits:
14            (1)   A misdemeanor of the third degree for a first
15      offense.
16            (2)   A misdemeanor of the second degree for a second or
17      subsequent offense.] An employer, or officer or agent of an
18      employer, who knowingly violates section 4(a) commits:
19            (1)   A misdemeanor of the first degree if the employer
20      has no prior offense under section 4(a).
21            (2)   A felony of the third degree if the employer has one
22      or more prior offenses under section 4(a).
23      * * *
24      (d)   Definitions.--As used in this section, the following
25   words and phrases shall have the meanings given to them in this
26   subsection unless the context clearly indicates otherwise:
27      "Prior offense."     A conviction of a violation of section 4,
28   if the judgment of sentence was imposed before the defendant is
29   sentenced for a separate violation of section 4.
30      Section 4.     The act is amended by adding a section to read:

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 1   Section 5.1.    Private right of action.
 2      (a)   Action.--An employee who has been misclassified in
 3   violation of this act, or has been discharged, been threatened
 4   or has otherwise suffered retaliation, discrimination or other
 5   adverse action as a result of participating in an investigation
 6   or reporting a violation of this act, may bring a private right
 7   of action in a court of common pleas in accordance with
 8   established civil procedures of this Commonwealth.
 9      (b)   Time.--An action under this section must be brought
10   within three years from the date that the employee knew of the
11   violation, retaliation or discrimination.
12      (c)   Relief.--If an employee prevails in an action commenced
13   under this section, the employee shall be entitled to the
14   following relief:
15            (1)   Reinstatement of the employee without a loss in
16      seniority status, if applicable.
17            (2)   Restitution equal to three times the amount of the
18      employee's wages and fringe benefits calculated from the date
19      of the violation, retaliation or discrimination.
20            (3)   Reasonable attorney fees and costs of the action.
21            (4)   Other legal and equitable relief the court deems
22      appropriate to make the employee whole.
23      Section 5.     Sections 6(a) and 10(a) of the act are amended
24   and the sections are amended by adding subsections to read:
25   Section 6.     Administrative penalties.
26      (a)   [General rule] Penalties.--When the secretary finds that
27   a person has violated this act, the secretary [may assess]:
28            (1)   Shall assess and collect [civil] administrative
29      penalties of not more than $1,000 for the first violation,
30      and not more than $2,500 for each subsequent violation.

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 1          (2)   May order a financial audit or tax audit of any
 2    relevant prospective records of the person.
 3    * * *
 4    (c)   Intentional violation.--
 5          (1)   If the secretary determines that a violation of this
 6    act was intentional, the secretary shall debar, for a period
 7    of at least three years, a contractor, subcontractor or
 8    person from bidding on or participating in a public work
 9    project, which shall include grants and loans to private
10    entities that perform construction on behalf of a State
11    contract.
12          (2)   A debarment under paragraph (1) shall apply to the
13    following:
14                (i)    Future projects and contracts not begun or
15          entered into on or before the date of the debarment.
16                (ii)    Current projects and contracts already entered
17          into but on which the debarred contractor, subcontractor
18          or person has not begun work as of the date of the
19          debarment.
20                (iii)    A successor entity.
21          (3)   The debarment under paragraph (1) may apply to
22    affiliates or other persons associated with the debarred
23    contractor, subcontractor or person if they are specifically
24    named and given written notice of the debarment and an
25    opportunity to appeal.
26          (4)   The debarment under paragraph (1) shall include all
27    divisions or other organizational elements of the debarred
28    contractor or subcontractor unless limited by its terms to
29    specific divisions or organizational elements.
30    (d)   Definitions.--As used in this section, the following

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 1   words and phrases shall have the meanings given to them in this
 2   subsection unless the context clearly indicates otherwise:
 3      "Successor entity."    An entity that meets any of the
 4   following criteria:
 5            (1)   Has one or more of the same principals or officers
 6      as the employer against whom the order was issued.
 7            (2)   Performs similar work within the same geographical
 8      area.
 9            (3)   Occupies the same premises.
10            (4)   Shares the same telephone number or facsimile
11      number.
12            (5)   Has the same email address or Internet website.
13            (6)   Employs substantially the same workforce or
14      administrative employees, or both.
15            (7)   Utilizes the same tools, equipment or facilities.
16            (8)   Employs or engages the services of any person or
17      persons involved in the direction or control of the other.
18            (9)   Lists substantially the same work experience.
19   Section 10.    Retaliation for action prohibited.
20      (a)   [General rule] Prohibition.--It shall be unlawful for an
21   employer, or officer or agent of an employer, to [discriminate
22   in any manner or take adverse action against any person in
23   retaliation for exercising rights protected under this act.
24   Rights protected under this act include, but are not limited to,
25   the right to file a complaint or inform any person about an
26   employer's noncompliance with this act.] discharge, threaten or
27   otherwise retaliate or discriminate in any manner against an
28   employee regarding compensation or other terms or conditions of
29   employment because the employee:
30            (1)   participates in an investigation, hearing or inquiry

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 1      by the secretary or any governmental authority; or
 2             (2)   reports or makes a complaint regarding a violation
 3      of this act to a construction industry employer or any
 4      governmental authority.
 5      (a.1)    Action.--An employee who suffers retaliation or
 6   discrimination in violation of this section may bring a private
 7   right of action under section 5.1.
 8      * * *
 9      Section 6.     Sections 11, 12 and 17 of the act are amended to
10   read:
11   Section 11.     Availability of information.
12      The department shall create a poster [for job sites] which
13   outlines the requirements and penalties under this act and shall
14   make the poster available on its Internet website. Every
15   employer subject to this act shall keep a summary of this act
16   and any regulations issued under this act applicable to the
17   employer, posted in a conspicuous place where employees normally
18   pass and can read it, both on job sites and in all places of
19   business. At the discretion of the secretary, a toll-free
20   hotline telephone number may be established to receive alleged
21   violations.
22   Section 12.     Use of penalty funds and recovered fees and costs.
23      [Any sum collected as a penalty under:
24             (1)   Sections 6, 7 and 9 for a violation of section 4(a)
25      (1) shall be paid into the Workers' Compensation
26      Administration Fund.
27             (2)   Sections 6, 7 and 9 for a violation of section 4(a)
28      (2) shall be paid into the Special Administration Fund
29      created under section 601.1 of the Unemployment Compensation
30      Law.

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 1            (3)   Section 9 for a violation of any other provision of
 2      this act shall be divided equally between the Workers'
 3      Compensation Administration Fund and the Special
 4      Administration Fund.] Any sum collected as a penalty,
 5      recovered attorney fee or cost associated with any
 6      investigation or enforcement action under this act shall be
 7      deposited into a restricted revenue account created in the
 8      General Fund. Money deposited into the restricted revenue
 9      account is appropriated to the department and shall be used
10      for future enforcement of this act.
11   Section 17.    Funding.
12      (a)   Enforcement.--The department shall not be required to
13   enforce this act until adequate funding is appropriated.
14      (b)   Recovery of fees and costs.--The department, Office of
15   Attorney General or a district attorney's office shall be
16   entitled to recover attorney fees and costs associated with the
17   investigation of construction worker misclassification, along
18   with any resulting enforcement action, from employers who
19   violate the provisions of this act.
20      Section 7.    This act shall take effect in 60 days.




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