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
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; 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:
* * *
"Debar." Action taken by the secretary to prohibit a
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22 contractor, subcontractor or person from contracting with or
participating in contracts for public work for a period of at
least three years.
* * *
"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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30 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 a section to read:
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30 Section 5.1. Private right of action.
(a) Action.--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.
(c) Relief.--If an employee prevails in an action commenced
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. 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.
(a) [General rule] Penalties.--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.
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30 (2) May order a financial audit or tax audit of any
relevant prospective records of the person.
* * *
(c) Intentional violation.--
(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.
(iii) A successor entity.
(3) The debarment under paragraph (1) may apply to
affiliates or other persons associated with the debarred
contractor, subcontractor or person if they are specifically
named and given written notice of the debarment and an
opportunity to appeal.
(4) The debarment under paragraph (1) shall include all
divisions or other organizational elements of the debarred
contractor or subcontractor unless limited by its terms to
specific divisions or organizational elements.
(d) Definitions.--As used in this section, the following
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30 words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Successor entity." An entity that meets any of the
following criteria:
(1) H as one or more of the same principals or officers
as the employer against whom the order was issued.
(2) Performs similar work within the same geographical
area.
(3) Occupies the same premises.
(4) Shares the same telephone number or facsimile
number.
(5) Has the same email address or Internet website.
(6) Employs substantially the same workforce or
administrative employees, or both.
(7) Utilizes the same tools, equipment or facilities.
(8) Employs or engages the services of any person or
persons involved in the direction or control of the other.
(9) Lists substantially the same work experience.
Section 10. Retaliation for action prohibited.
(a) [General rule] Prohibition.--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 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
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30 by the secretary or any governmental authority; or
(2) reports or makes a complaint regarding a 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:
(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.
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30 (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. ] A ny 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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