A new Wisconsin law gives the state more power to crack down on employers who illegally decline to pay unemployment benefits for construction workers.
Gov. Jim Doyle signed the bill into law Wednesday.
Some construction contractors avoid paying unemployment and workers’ compensation insurance by fraudulently classifying their employees as independent contractors on job sites, said Hal Bergan, administrator of the state Department of Workforce Development’s Unemployment Insurance Division.
The new law lets the state penalize violators up to $25,000 per misclassification occurrence and shut down construction sites.
A contractor is not required by the state to pay unemployment taxes for an independent worker. But many people who are listed as independents actually are not, Bergan said. The threshold is that if a worker is under the direct supervision of a contractor, then that person is not an independent.
Bergan said employee misclassification occurs largely in the drywalling and roofing industries.
The new law also lets DWD create jobs for four new compliance workers who would visit construction sites to verify contractors are providing benefits to their workers.
The economic downturn and its effect on the construction industry has heightened the concern about the illegal practice, Bergan said. More construction workers are filing for unemployment benefits because there is less work.
DWD collects and doles out unemployment benefits.