Gov. Tony Evers is convening a task force to recommend ways to combat an abuse known as worker misclassification.
Appearing at the North Central States Regional Council of Carpenters’ training center in Madison on Monday, Evers signed an executive order forming a Joint Enforcement Task Force on Payroll Fraud and Worker Misclassification. Separately, Evers’ order calls on the task force to coordinate the efforts of the various state agencies involved in fighting work misclassification. Those include the departments of revenue, workforce development and justice and the Office of the Commissioner of Insurance.
Worker misclassification occurs when employers mislabel direct employees as independent contractors, usually to avoid paying unemployment taxes, worker’s compensation premiums and similar charges.
Misclassification is widely believed to be rampant in the construction industry, in part because the seasonal nature of the work and frequent layoffs make it hard to distinguish between direct employees and temporary help. Construction companies have a financial incentive to blur the lines. By misclassifying workers, unscrupulous contractors can avoid having to account for unemployment taxes and similar costs when they’re calculating their bid prices.
According to a news release from the state, the task force will consist of the secretaries of the Department of Workforce Development and the Department of Revenue, the administrators of the DWD’s worker’s compensation and unemployment insurance divisions, the Attorney General or a designee, the commissioner of insurance or a designee and others. Evers said all the appointees will have a good understanding of worker misclassification and the troubles it causes. He said he expects the task force to come up with recommendations in short order rather than taking two or three years.
“Frankly, our goal is to be prevent workers misclassification in the first place,” Evers said. “It’s one thing to catch people who are not paying attention to the law and deliberately breaking the law. And it’s another thing to prevent it from happening, period.”
Evers said he was approached by various labor representatives while he was on the campaign trail about fighting worker misclassification. Union groups were quick on Monday to praise the governor’s executive order.
“When an employee is wrongly classified as an ‘independent contractor’ both the state and the worker suffer,” said Dan Bukiewicz, president of Milwaukee Building and Construction Trades Council, in an official statement.
But worker misclassification is not just a concern of Democrats and their usual allies. Under Evers’ predecessor, former Gov. Scott Walker, the state raised penalties for misclassification and began putting more resources toward cracking down on the abuse.
Over the course of three years, the DWD conducted 1,963 investigations into allegations of worker misclassification. Of those, 422 resulted in audits that turned up 5,841 workers who had been misclassified. About $70 million worth of wages had been underreported. As punishment to the employers who committed the violations, the DWD collected $1.8 million worth of taxes, interest and penalties.