Union rep urges state Legislature to tackle payroll fraud

Labor representative Andy Buck is urging the Legislature to take up measures to tackle worker misclassification and payroll fraud. 

The Joint Task Force on Payroll Fraud and Worker Misclassification submitted its 2021 annual report to Gov. Tony Evers last month. Worker misclassification is illegally labeling employees as independent contractors in order to avoid giving them benefits, such as minimum wage, overtime compensation, family and medical leave, and unemployment insurance.

Evers’ budget proposal includes several provisions from last year’s task force report, including adding three new UI field auditors, recreating the Construction Contractor Registration program and providing outreach and education on worker misclassification, among others.

Buck, the director of government affairs at Painters and Allied Trades, District Council No. 7, serves on the task force as the workers representative. The union represents about 2,400 members in Wisconsin and the Upper Peninsula.

He said the Legislature didn’t take up any of the recommendations last year indicating to him that lawmakers don’t think this is an issue.

Wisconsin is losing $200 million in tax revenue annually due to payroll fraud, according to a study on worker misclassification released in early 2020. The state lost $91.2 million in personal income taxes, $56 million in unemployment insurance taxes, $51.2 million in business taxes, and $2.6 million in benefits paid to uninsured workers.

This year’s report added recommendations, such as creating a statutory Insurance Fraud Bureau of Investigations, requiring insurers and self-insured employers to report workers’ comp and application fraud to DWD, and requiring DWD’s Equal Rights Division to investigate and adjudicate misclassification within the concept of labor standards.

These were areas the task force wanted to explore further because the problem around worker misclassification isn’t going away, Buck explained. 

“We’re going to need to either have the Legislature act on some of this stuff to either create new laws or some regulatory changes,” he said. “Responsible contractors and taxpayers are fitting the bill for this when you have to do an additional school referendum or pave some more roads. This is money that all the responsible contractors, they’re paying this, they have to pay this, they play by the rules. What we’re doing is looking the other way and letting cheaters win in Wisconsin.”

While the task force is bipartisan, Buck noted that Republican lawmakers hadn’t shown much participation. He claimed Sen. Dale Kooyenga, R-Brookfield, only attended the initial meeting. Kooyenga’s staff attended the task force meetings thereafter.

“Just in that it shows they must not care too much about this issue,” Buck said. “But if they were serious about cracking down on this issue or protecting the taxpayers, they would participate in the conversation.”

Kooyenga told WisBusiness.com he appreciates the work of the task force as the recommendations start the process of becoming law.

“Like any task force, their recommendations are now available to members of the Legislature to make their own judgements,” he said. “Those that are priorities for any legislator will go through the typical process, which includes gathering additional feedback on the pros and cons of the task force recommendations.”

See the recent task force report: https://dwd.wisconsin.gov/misclassification/pdf/2021-misclassification-task-force-report.pdf 

See another story from WisBusiness.com on payroll fraud: https://www.wisbusiness.com/2021/construction-groups-support-proposals-to-combat-worker-misclassification/ 

-By Stephanie Hoff