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Fair Labor

WORKER
MISCLASSIFICATION

Worker misclassification is a serious problem in the Commonwealth that deprives workers of basic protections--like minimum wage, overtime, and workers' compensation--and wrongly shifts the cost of doing business from employers to employees

Between
10-20%
of employers misclassify at least one employee as an independent contractor

Definitions:

Employees EMPLOYEES
  • Protected by federal, state, local labor + employment laws
  • Entitled to certain benefits like:
    • Minimum wage
    • Unemployment insurance
    • Workers' compensation coverage
  • Can organize & take collective action to improve pay + working conditions
  • Have employers pay their share of employment taxes (& may be required to provide health insurance)
Independent Contractors INDEPENDENT CONTRACTORS
  • Self-employed businesspeople
  • Responsible for carrying their own insurance & paying self-employment taxes
  • Not protected by federal, state, or local labor & employment laws
  • Not entitled to minimum wage or overtime pay
  • Typically not protected against sexual harassment + discrimination
  • Cannot join or organize a union

ACT 72 & CONTRACTORS

Construction employees are particularly susceptible to misclassification. Act 72 protects them by providing specific criteria for classification. For a construction worker to be considered an independent contractor:
  1. You have to have a written contract with the
    person or business you work for;
  2. You must control and direct you own work;
  3. You must possess the tools you need to perform
    the work;
  4. Your arrangement with the business must allow
    you to earn a profit or suffer a loss from your work;
  5. You must be an owner or partner in your own
    business;
  6. Your business location must be separate from the
    location of the business or person that hired you to
    perform the construction work; and
  7. You must previously have worked as an
    independent contractor, or hold yourself out as
    available and able to work as an independent
    contractor

WHY IT MATTERS

Misclassifying workers may carry civil or criminal penalties for employers
Many employers that intentionally misclassify do so as a cost-saving measure--at the expense of workers

We need your help


If you believe you have been misclassified as an independent contractor and wish to file a complaint, you may contact the Fair Labor Section at wagetheft@attorneygeneral.gov, or you may file a complaint with the department of Labor and Industry under Construction Workplace Misclassification Act or the Wage Payment and Collection Law.