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Lawmaker challenges contractor registration

A state lawmaker, claiming the Department of Commerce has too loose a definition of the word “emergency,” is trying to overturn the agency’s contractor registration rule.

“(DOC) went the emergency rule route so they can get it enacted quickly,” said state Rep. Roger Roth, an Appleton Republican seeking co-sponsors for a bill overturning the DOC rule. “They want a slush fund of easy money they can get for whatever they want to use it for.”

The DOC rule, enacted March 2, requires contractors pay $100 to register with the department’s Division of Safety and Buildings if their work is regulated under any DOC codes affecting public and commercial buildings, one- and two-family dwellings, and public swimming pools. The registration money remains in the DOC division’s budget, said DOC spokesman Tony Hozeny.

He said the rule should immediately cut down on the number of misclassified workers, which include contractors skirting state rules by wrongly classifying themselves as independent and then not paying their employees workers’ compensation or unemployment insurance.

Hozeny said the emergency is real, and money is at the heart of the problem. A 2007 Minnesota audit of 24 employers that improperly classified workers revealed $496,000 in unpaid income taxes, he said. With

Wisconsin facing a $5.9 billion budget deficit, he said, now is not the time to lose that kind of money.

“That’s almost half a million dollars from just 24 employers,” Hozeny said. “When you have a budget deficit like we do, there’s going to be urgency with everything.”

Building groups, such as the Wisconsin Builders Association and the Associated Builders & Contractors of Wisconsin Inc., are encouraging members to register before the DOC’s July 1 deadline. But the organizations also question why DOC chose to declare an emergency, particularly because the Wisconsin Department of Workforce Development has a separate task force dedicated to the worker misclassification issue.

That group will soon draft a report that could propose state laws relating to the issue.

“Things are out of sequence,” said John Mielke, vice president of ABC of Wisconsin. “The DWD hasn’t completed its work, but the DOC put this rule forward. And now there’s a bill introduced to overturn the rule.

“I think the legislators are on the right track in terms of asking, “What is the emergency?'”

The emergency rule’s $100 registration lasts four years. So far, about 650 contractors have registered.
Roth said the expense should not be understated.

“One hundred dollars is not nominal,” said Roth, who said he expects his bill to be assigned to committee next week. “Talk to any homebuilder. We’re hurting out there.”

Neither Hozeny nor Roth said what would happen to contractor fees if Roth’s bill overturns the DOC registration.

“Ideally, I’d want to see that money returned to them,” Roth said. “But I’d have to check and see what the proper course of action would be.”

The state established emergency rule authority, he said, to let state agencies take action when the Legislature is out of session or cannot be assembled in time to deal with a specific issue. That was not the case with the DOC’s rule, Roth said.

Hozeny said DOC’s emergency reasoning is clearly stated in the rule’s language.

“There are a lot of reasons why we believe this is good, and we’ve heard from plenty of people who want to know why we didn’t already have something in place,” he said. “We’re going through the administrative process, and we’ll continue to pursue the course we’ve taken.”

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