MacIver News Service | April 22, 2019
By M.D. Kittle
MADISON, Wis. — If there had ever been any question whether Gov. Tony Evers’ Big Labor allies would be directing policy, that question has been settled early and often.
The latest example — the governor’s press conference last week announcing his executive order creating a task force to examine payroll fraud and worker misclassification. The Democrat was surrounded by Wisconsin union leaders, many of whom gave generously to the Evers campaign.
While the governor painted a picture of corrupt companies robbing Wisconsin’s working men and women, he failed to address the problematic patchwork of confusing, disconnected labor laws that have cost well-intentioned businesses big, industry advocates say.
“In Wisconsin, it is convoluted and not always clear, even for businesses with the best of intentions who want to comply with the law,” said Scott Manley, senior vice president of Government Relations for Wisconsin Manufacturers & Commerce, the state’s largest business association.
There is no doubt that payroll fraud is a problem among a small group of employers. They intentionally slap the “independent contractor” label on employees to avoid paying unemployment and other benefits and wages workers are entitled to.
A Department of Workforce Development audit found 8,677 misclassified workers in Wisconsin last year, generating nearly $2 million in unemployment insurance taxes, interest and penalties. DWD’s misclassification union found approximately $70 million in wages had been unreported.
“It’s absolutely important we get this issue solved,” Evers said, after announcing the task force at a union job training site.
Manley said WMC supports a level playing field for employees, and businesses that “gain a dishonest advantage” by misclassifying workers should face consequences.
But Wisconsin’s disparate classifications of employees and contracted workers under unemployment insurance, worker’s compensation, and hourly wage laws aren’t helping the problem.
Unemployment compensation, for instance, includes a two-part test to determine whether a worker is “free from the control or direction of the employer.” If yes, then there are nine standards outlined, six of which must be met in order for the worker to be classified as an independent contractor. But under worker’s compensation, all nine criteria must be met.
“That puts employers in a very difficult position and I think from our perspective if the governor is really interested in cracking down on abuses and increasing enforcement against employers … we need to take a look at harmonizing those definitions of employees and independent contractors, so we have a clear definition of what they can follow,” Manley said.
It’s ultimately up to the Legislature to clean up and clarify confusing labor law. The Legislature has been slow to act.
John Raines, executive secretary-treasurer of the North Central States Regional Council of Carpenters asserts that payroll fraud is an “epidemic” in the construction industry. It’s not.
The issue, however, is an easy vehicle for Big Labor to wrestle back some of the control they lost in recent years under collective-bargaining and worker freedom reform laws with Republicans in control of the Legislature and the governor’s office.
At least 16 states have similar “payroll fraud” task forces, mostly liberal states where organized labor calls a lot of the shots in public policy. Each task force generally includes government bureaucrats — representatives from departments of Revenue, Workforce Development, Justice, and the insurance commissioner. Just like Evers’ task force. And unions. Lots of union representation.
The commissions often push policies that serve to hammer businesses, generally non-union businesses they don’t like. In Colorado, a mandated task force by Gov. John Hickenlooper (one of 19 Democrats running for president in 2020) has the Carpenters union creating a “centralized database to share tips and leads” for targeted investigations.
It’s not just Colorado.
The Madison-based Construction Business Group, a labor-management organization led by some of the biggest union bosses in the state, is looking for a “Wage & Hour Investigator” in southeast Wisconsin, according to an online job post. The position, which pays between $47,840 and $62,400 a year, is effectively a construction site spy. Among the gig’s responsibilities, the investigator, “Travels to construction sites and monitors target companies during work activity” and “Reports wage, benefit, safety or other violations/problems.”
Raines, of North Central States Regional Council of Carpenters, is on CBG’s Compliance Board, and the group’s executive director is Robb Kahl, a former Democrat lawmaker with deep ties to Big Labor. Kahl was at last week’s press conference. He also was a member of Evers’ Transportation Stakeholder Task Force, which is pushing a gas tax increase that would help fatten the wallets of road builders and construction unions around the state.
Construction Business Group in a 2017 newsletter noted six investigators expanding their investigations to include compliance review on independent contractor laws and misclassification standards, among other areas.
Who’s on Evers’ new union-backed task force? MacIver News Service asked the governor’s office, and was told that Evers had yet to make appointments beyond government agency members as of Thursday afternoon.
The Associated Builders and Contractors is hoping Evers’ new task force isn’t like his transportation task force, made up of union and government representatives and not a single taxpayer advocacy group.
“On behalf of our nearly 900 employer members, I hope the Associated Builders and Contractors of Wisconsin have the opportunity to participate in this task force so meaningful bipartisan recommendations can be approved by the Legislature and signed into law by Governor Evers,” said John Schulze, director of Legal and Government Relations for ABC’s Wisconsin chapter.