The Pennsylvania Department of Labor & Industry’s Joint Task Force on Misclassification of Employees has submitted its recommendations to the state General Assembly.

Tim Ward, director of government relations and advocacy at the Pennsylvania Health Care Association, told the McKnight’s Business Daily Monday that he has some concerns about enforcement of the group’s recommendations, however. Specifically, he questioned whether the state Department of Labor & Industry would have the authority to issue a work stoppage against an “entity” if a hired individual is found to be a misclassified worker. 

“If a mistake in classification does occur, a long-term care provider cannot stop operations. A care setting is not the same as a construction job site,” Ward said. “It is ultimately the responsibility of the state licensing agency to determine what, if any, action should be taken against a healthcare entity.”

He suggested that the joint task force and the state Department of Labor & Industry work with industry stakeholders in areas of improvement to help prevent the need for enforcement. 

“The push for continued education and public outreach about obligations under the law is positive, but bringing stakeholders to the table not only demonstrates the value of stakeholder input; it can also help deliver more proactive results and a better awareness of regulatory processes currently in place,” he said.

The bipartisan joint task force has held monthly meetings since January 2021 to study misclassification and will continue to meet through December, when its authority under Act 85 will expire. In addition to members appointed by the four caucuses in the General Assembly, the representatives from the Office of the Attorney General and the departments of Revenue and Labor & Industry also serve on the seven-member body.

The Joint Task Force report estimates:

  • 48,939 employers in Pennsylvania currently misclassify at least one employee annually;
  • 259,000 Pennsylvania workers are misclassified annually;
  • $91 million in annual revenue to the Unemployment Compensation Trust Fund is lost due to misclassification;
  • Between $6.4 million and $124.5 million in revenue in 2019 to the General Fund is lost due to misclassification;
  • $383,000 in estimated losses to the Uninsured Employer Guaranty Fund were due to misclassification in 2021;
  • 10,892 misclassified employees had an injury or illness at work were denied Workers’ Compensation in 2021;
  • There were $153 million in estimated losses to misclassified employees who had an injury or illness at work in 2021 without workers’ compensation insurance.

Overall, Ward said, PHCA agrees with the intent of the recommendations. “For the most part, they fall in line with the transparency and accountability that already exists for long-term care providers,” he said.

Some sectors, Ward noted, such nursing homes, already have definitions for classifications and coding of employees that are submitted to the payroll-based journal, which is audited by the Centers for Medicare & Medicaid Services. 

“An area where we can see these recommendations be helpful in correcting misclassifications is with contracted services in long-term care, such as staffing agencies. We have seen an example of the US Department of Labor file and win a judgment against a Pennsylvania staffing agency that involved shorting employees wages and misclassifying their employees as independent contractors,” he said.