The Construction Workplace Misclassification Act regulates when contractors may identify their workers as independent contractors for payroll and tax purposes. This act must be understood in light of the Unemployment Compensation Act, which requires employers to pay a small percentage of each employee’s, but not independent contractor’s, earnings in unemployment compensation tax. Failure to abide by these regulations can trigger criminal prosecution and heavy fines.
In October 2008, the Pennsylvania Legislature approved the Home Improvement Consumer Protection Act (HICPA) which requires contractors to register with the Bureau of Consumer Protection. The law also mandates certain terms and language for home improvement contracts, and codifies penalties for contractor fraud.