House Democrats push payroll fraud bills after past unsuccessful bids

Luna Ruth

Michigan House Democrats are again floating a package of bills meant to crack down on payroll fraud and unfair pay practices — bills that have gotten next to no movement in past sessions of the GOP-led Legislature. 

The bills would home in on the misclassification of workers as self-employed independent contractors — a practice that seeks to avoid paying overtime, benefits, workers compensation or payroll taxes. It also allows employers to avoid paying taxes for unemployment, Social Security or Medicare.

The package would make it a violation to misclassify employees as independent contractors, increase civil and criminal penalties for wage theft, expand whistleblower protections to include independent contractors and require the state Department of Treasury to notify independent contractors of the difference between an independent contract and employee.

Janitorial workers rally for a $15-an-hour minimum wage during a June 2018 protest. Michigan House Democrats and labor unions argue that some janitorial workers are misclassified as self-employed contractors by certain firms to avoid paying certain benefits and taxes.

The bills also would create an ombudsman for state employees to report fraud or waste, ban non-compete agreement for low-wage workers and require companies, upon request, to provide an employee wage information of a similarly situated employee.

“This is really an issue of looking out for all workers in the state,” said House Democratic Leader Donna Lasinski, D-Scio Township. The issues addressed by the legislation create an uneven playing field where “one business, when they’re competing for a project, are not competing fairly with law-abiding businesses.”

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