Seeking to place new regulations on construction companies operating in Pennsylvania, Gov. Ed Rendell signed Pennsylvania’s new Construction Workplace Misclassification Act (CWMA) into law in October 2010. Independent contractors can only be classified by construction companies under specific conditions outlined in the CWMA. Any independent contractor who doesn’t meet the outlined specifications, should be reclassified as an employee.
The CWMA also mandates that failure to withhold federal or state income taxes or failure to pay unemployment compensation or workers compensation premiums will not be a consideration in whether a person is an independent contractor. Pennsylvania construction companies must be in compliance with CWMA as of Feb 10, 2011 or face penalties including monetary fines and jail time. Intentionally misclassifying an independent contractor is a criminal misdemeanor and can include up to 12 months in jail and fines. Negligent misclassification is a summary offense and includes a $1,000 penalty. The Pennsylvania Department of Labor & Industry (DLI) can assess civil fines and issue a cease-work order against the company until the misclassification is corrected. It is also illegal to contract with a subcontractor until corrections are made.
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