Empower Wisconsin | Feb. 24, 2020
By M.D. Kittle
MADISON — Gov. Tony Evers packed his Joint Task Force on Payroll Fraud and Worker Misclassification with Big Labor representatives. So it should come as no surprise the panel’s draft recommendations benefit Big Labor.
The task force is scheduled to meet on Tuesday in La Crosse to vote on at least five recommendations that ultimately target building contractors and players in the emerging gig economy.
It was established last year to examine payroll fraud and worker misclassification, particularly the misclassifying of workers as contracted employees. But while the governor painted a picture of corrupt companies robbing Wisconsin’s working men and women, his task force has 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,” Scott Manley, senior vice president of Government Relations for Wisconsin Manufacturers & Commerce, the state’s largest business association, told MacIver News Service in April.
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.
The union-heavy task force recommends creating an “enhanced Contractor Registration Program,” mandating all contractors in Wisconsin register with the Department of Safety and Professional Services. Under Wisconsin’s old registration system, contractors would write a check, make the state a littler richer, and be on their way. The task force’s recommended database would include much more detailed information — and come with a “minimal fee.” Contractors would also have to sign off on their “knowledge” of the state’s complex worker classification laws.
Evers’ task force recommends creating an “Interagency Coordinated Enforcement Team” that would go after suspected violators with a vengeance. Penalties would be stiff, with an escalating scale.
The task force also recommends sending more money to the Department of Workforce Development to hire more field auditors, among other government agents.
In short, much more red tape, higher costs for businesses and consumers, and the potential unintended consequences of start-ups — particularly minority- and women-owned businesses — locked out of the competitive process, regulation watchers say.
There’s even talk of a shaming component, or the posting of violators and their violations on websites. While there is no doubt that there are some egregious offenses in worker misclassification, business advocates have raised concerns about unintentional violations from companies that are trying to follow the law. The task force recommends an education component, but it appears the Big Labor-sought penalties and regulations would be more pronounced.
“All but one of the public members of the task force is either employed by or affiliated with a construction union. So I guess if you only have a hammer, you tend to see every problem as a nail,” said John Schulze, director of Legal and Government Affairs for the Associated Builders and Contractors of Wisconsin.
Call it return on investment. As MacIver reported, the governor’s campaign hauled in north of $1.57 million from unions, or about 40 percent of the nearly $4 million Evers collected in 2018 campaign contributions. The Carpenters union, for instance, contributed $172,000 to Evers’ campaign.
If adopted by the Legislature, the new regulations would effectively make contractors be the regulators for the state, business advocates say.
It’s unlikely the recommendations will go anywhere this year, but it’s a good bet they will be included in Evers’ next budget.