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Task force sets sights on misclassification

Gov. Tony Evers on Friday announced appointments to a task force that will examine worker misclassification and payroll fraud in Wisconsin.

The appointments come after Evers signed an executive order in April forming the group to re-examine how the state tries to combat misclassification — a type of abuse that’s believed to be rampant in the construction industry. The task force is charged with developing recommendations and reporting its activities and findings to the governor on or before March of each year.

“Individual agencies do a great job at combating this serious issue that adversely affects some of our most vulnerable workers, but through this task force, agency efforts will be better coordinated,” Evers said in a statement. “By evaluating each agency’s approach and investigation methods and sharing best practices, our efforts to support Wisconsin workers who are left without important safeguards like unemployment insurance and labor protections will be more strategic and coordinated.”

The formation of the task force marks the first time in a decade that the state is taking another look at how it enforces worker misclassification. The work comes as many in the construction industry say this sort of abuse is becoming ever more prevalent, despite the state’s attempts to combat it.

Misclassification occurs when employers wrongly label workers as temporary employees in order to avoid paying unemployment insurance taxes and other charges. By dodging such costs, companies can often keep their bid prices artificially low, undercutting rivals that pay their employees fairly.

DWD’s Unemployment Insurance Division enforces the state’s worker-misclassification rules. In 2018, it conducted 2,459 audits of companies, identifying 8,877 misclassified workers. The agency last year collected more than $1.5 million worth of unemployment-insurance taxes, interest and penalties.

In fighting misclassification, the agency often relies on tips from contractors, workers and field investigators. Although misclassification and other forms of wage theft occur in many industries, these abuses are thought to be particularly common in construction. An agency official said recently that 62 percent of its investigations were of construction companies.

“(The task force is) bipartisan and there are companies represented that are both union and nonunion contractors throughout the entire state,” said Andrew Disch, political director for the Northcentral States Regional Council of Carpenters. “This has never been a partisan issue. It has always been about enforcing the law.”

The new task force will be composed in large part of staff employees from the Department of Workforce Development; DWD Secretary-designee Caleb Frostman will serve as the chairman. The task force also includes several union officials and executives at two unionized contractors, as well as an executive at a non-union construction company.

“I am excited to chair this important task force and proud of the work that investigators have done and will continue to do to help eradicate worker misclassification,” Frostman said. “The goal of the task force is to give our front-line staff even more tools and strategies that they can employ as they continue their work to support the Wisconsin worker.”

The members of the task force are:

  • DWD Secretary or designee: Sec. Caleb Frostman (Task Force chair)
  • Attorney General or designee: Michael Morris
  • DOR Secretary or designee: Maria Guerra Lapacek
  • OCI Secretary or designee: Andrew Stoughton
  • DWD Worker’s Compensation Division: Steve Peters
  • DWD Unemployment Insurance Division: Mark Reihl
  • DWD Equal Rights Division: Jesus Villa
  • Workers Representative: Andy Buck, Glaziers Union Local 1204
  • Business Community Representative: Pete Braun, Wall-Tech Companies
  • Senate Majority Caucus: Sen. Dale Kooyenga, R-Brookfield
  • Senate Minority Caucus: Sen. Dave Hansen, D- Green Bay
  • Assembly Majority Caucus: Vacant
  • Assembly Minority Caucus: Rep. Chris Sinicki, D-Milwaukee
  • Public Member: Cynthia Buchko, Construction Business Group
  • Public Member: Stuart Wilson, International Association of Sheet Metal, Air, Rail and Transportation Workers Local 18
  • Public Member: Jerry Shea, Market & Johnson
  • Public Member: Gary Rockweiler, Rockweiler Insulation
  • Public Member: Tim DeMinter, International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers Local 383

About Nate Beck, nbeck@dailyreporter.com

Nate Beck is The Daily Reporter's construction staff writer. He can be reached at (414) 225-1814 (office) or 414-388-5635 (mobile).

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