1099 Risk Blog

PA Bill to Make Misclassification a Felony

A Pennsylvania bill that would make the misclassification of employees as 1099 independent contractors a third-degree felony is making progress after passing in the House on Monday.

"Misclassifying employees as independent contractors is a tax-evasion strategy," Lentz said. "Until we impose harsh penalties on the practice, workers and law-abiding employers will continue to get cheated.When we allow some unscrupulous employers to avoid responsibility to their workers, we allow them to gain a competitive advantage over the vast majority of employers who do play by the rules and who do treat their employees fairly."  Read the press release >

According to the Pittsburgh Business Times," While the financial toll hasn't been quantified in Pennsylvania, misclassification of workers results in Illinois losing $34.8 million annually in workers' comp premiums in its construction industry alone, according to estimates. New York loses as much as $176 million annually in unemployment insurance premiums. Massachusetts is estimated to lose between $12.6 million and $25 million annually in unemployment insurance premiums and between $91 million and $152 million in income taxes."  Read the full article > 

Download the full text of H.B. 2400 here >