Report: Worker-misclassification fight nets $1.4M

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In 2017 alone, Wisconsin’s work to crack down on employers who misclassify workers as independent contractors instead of direct employees has netted nearly $1.4 million.

Because of seasonal layoffs that can muddy the distinction between permanent employees and someone hired for a specific job, worker misclassification is believed to be rampant in the construction industry.

Industry officials have said deliberate misclassification not only deprives the state of taxes and other resources but also gives dishonest companies an unfair advantage by letting them avoid costs that their more honest rivals roll into bid prices.

In 2017, the DWD continued its crackdown on misclassified workers, identifying 6,230 of them and collecting $1.4 million dollars that went back into the state’s unemployment-benefits system, according to a report released by the state Department of Workforce Development. The department also reported conducting 500 field investigations into worker misclassification.

About this same time last year, state officials had reported recovering nearly $1.13 million over the course of more than three years. The state started ramping up its enforcement of worker-misclassification laws in May 2013.

Members of the state’s Unemployment Insurance Advisory Council heard a summary of the report’s main points at a public meeting on Thursday. The council is a group of labor and employer representatives who advise the state Legislature on changes to the state’s unemployment benefits.

According to the report, the state’s benefit payments were down 11 percent in 2017 and fraudulent benefit overpayments were down 42 percent, falling from $8.7 million to $5 million. The number of fraud cases is also down from 8,438 cases in 2016 to 5,132 cases in 2017.

Among other ways, the department tries to detect fraud by verifying wages with employers and sending out a unit that investigates fraud accusations and prepares and recommends cases for criminal prosecution.

“We’re catching people sooner,” said Janell Knutson, chair of the Unemployment Insurance Advisory Council, on Thursday. “Sometimes it took us months before we were able to detect over payments. Now, with the tools that we have, we’re able to catch people quicker.”

Also according to the report, the state’s Unemployment Insurance Trust Fund hit $1.5 billion dollars at the end of 2017. In the years following the last recession, the fund had gone nearly $1.7 billion in the red. Follow @erikastrebel