Independent Contractor Compliance Blog

Wisconsin Governor Jim Doyle recently signed into law two pieces of legislation significantly increasing the risks of misclassifying employees. The two laws are Senate Bill 672, and Assembly Bill 929.

With these new laws Wisconsin is joining the federal government and most states across the nation in getting tougher on misclassifications of workers.

These new laws establish mechanisms for the Wisconsin Department of Workforce Development (DWD) to identify and punish employers who misclassify their employees as independent contractors. Specifically, the laws authorize the DWD to:

• Establish an outreach and education program to educate employers, employees and the public about the proper classification of workers,
• Set up a system for workers and others to complain about misclassification,
• Investigate complaints of misclassification,
• Also to initiate investigations, based on independently established leads,
• Share information about employers who are misclassifying workers with other state or local agencies, so they may prosecute offenders for other violations,
• Establish a system of attorneys to conduct hearings to hear cases and issue decisions as appeal tribunals,
• Require employers to provide proof of maintaining proper employee records, including wage and hour information, and sufficient worker’s compensation coverage for its employees,
• To issue a ‘stop work order’ requiring the employer to, ah…stop all work at any given location where there are violations.

The laws also affirms that actions, fines, penalties and assessments under this law are in addition to any other “…investigation, order, or decision; any civil or criminal action or administrative proceeding; or any obligation for any payment, reimbursement, assessment, surcharge, forfeiture or other remedy or penalty under any…(other) chapters…”

The new laws are even tougher for violations in the construction industry, where across the nation non-compliance is very common.

The new laws also provide for special fines of employers engaged in the painting or drywall industry who willfully misclassify their employees, with the intent to evade the unemployment insurance laws, worker’s compensation laws, income tax laws or discrimination laws. The fines are $25,000 for each violation. This bill amends a current law providing the same penalty for willful misclassifications in other trades in the construction industry, so that now virtually all segments of the Wisconsin construction industry is subject to the $25,000 fine per violation.  Under the law the DWD will determine its own rules defining what constitutes willful misclassification of an employee.

This is just the latest chapter in the national trend of increasing tax revenues by “Leveling the Playing Field” and being tough on worker misclassifications. Is your company properly protected? For an easy solution contact us at Collabrus. We’re here to help!