Pennsylvania Department of Labor & Industry Fines Drywall Company for Worker Misclassification

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PENNSYLVANIA — The Pennsylvania Department of Labor & Industry (L&I) has announced a fine of $32,250 against a Cambria County-based drywall company, Keystone Drywall, for misclassifying 43 construction workers. The company violated the Pennsylvania Construction Workplace Misclassification Act (Act 72) by incorrectly classifying employees as independent contractors, thereby denying them essential employee rights and benefits.

Worker misclassification occurs when an employer wrongly categorizes a worker as an independent contractor instead of an employee. This practice denies workers access to critical benefits such as unemployment and workers’ compensation. L&I is urging employers to familiarize themselves with Act 72 to ensure full compliance and avoid costly penalties.

The misclassification was discovered during a routine compliance audit by L&I’s Office of Unemployment Tax Services. The matter was then referred to L&I’s Bureau of Labor Law Compliance (BLLC) for investigation. BLLC concluded that Keystone Drywall had indeed misclassified 43 construction workers in violation of Act 72.

“Misclassification jeopardizes workers’ access to the unemployment and workers’ compensation benefits to which they are entitled, in addition to depriving them of many other rights they are entitled to under the law,” said L&I Secretary Nancy A. Walker. “At L&I, we collaborate across bureaus to act when we see evidence of worker misclassification. We are also taking steps to be transparent about our commitment to protecting workers from misclassification – and the potential penalties for violating Act 72 – because businesses that do not undercut the competition by breaking Pennsylvania labor laws deserve a level playing field.”

Act 72, which came into effect in 2011, is designed to prevent construction employees from losing protections and benefits often lost when employers misclassify employees as independent contractors. Under Act 72, L&I may assess civil penalties of up to $1,000 for the first violation and up to $2,500 for each subsequent violation.

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The fine against Keystone Drywall underscores the importance L&I places on proper worker classification. The department remains committed to ensuring that all workers in Pennsylvania are correctly classified and receive the protections and benefits they are entitled to under the law. This action serves as a reminder to all employers of the potential consequences of violating Act 72.

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