Lisa Canada: Lawmakers should act quickly to stop payroll, tax fraud hurting workers

April 24, 2019 10:06 am

The Michigan Regional Council of Carpenters and Millwrights represents more than 14,000 men and women who build our state from the ground up.

From the bridges we drive across, to the schools, hospitals and factories we depend upon, our members work hard for good, Michigan contractors and build the infrastructure our state needs.

Carpenters Training Center in Ferndale, March 18, 2019 | Susan J. Demas

But not all workers are fortunate enough to work for honest employers.

Time and time again, on work sites all over our state, we see employers who are cheating their own workers. These are businesses and individuals who want to make a fast buck by paying their employees off the books or under the table. Sometimes, they misclassify their employees as “1099 independent contractors.”

What they steal from their workers goes into their own pockets, totaling more than $429 million in lost wages between 2013 and 2015. In the process, they’ve avoided paying more than $107 million in payroll taxes, workers’ compensation premiums, and unemployment insurance each year.

That’s money Michigan needs to rebuild our great state.

Businesses and individuals who cheat their workers are committing a crime. All too often, they get away with these illegal business practices because enforcement is lacking.

Federal agencies that are supposed to stop this crime, such as the U.S. Department of Labor and the Internal Revenue Service, are understaffed and lack resources. Without anyone to hold them accountable, these bad actors will continue to evade the law and exploit working people.

Dana Nessel addresses MCRC on Feb. 1 | Ken Coleman

Until now.

This week, Attorney General Dana Nessel and legislative leaders announced that they fully intend to crack down on this criminal behavior. That’s good news for workers, businesses that play by the rules and Michigan taxpayers.

Carpenters, millwrights and all skilled tradespeople strongly believe that working men and women deserve a fair wage for a hard day’s work. All workers should be paid what they’ve earned.

This is especially true for minimum wage workers, whose employers steal twenty-seven percent of their earnings

In other words, these men and women are getting robbed, and their employers are getting rich from this illegal behavior. They’re not getting their full pay, they’re not getting overtime, and they’re not protected by workers’ compensation insurance and other benefits.

So when they get hurt at work, they’re on their own. Without insurance or workers’ compensation, they face financial ruin because of huge medical bills. Unable to work, they don’t get any pay for lost wages.  

Twenty percent of minimum wage workers who are cheated live in poverty, and one-third receive public assistance, according to the Economic Policy Institute.

Crooked companies that cheat their workers also hurt legitimate businesses that follow rules and pay their taxes.

The Carpenters and Millwrights work with some of the most respected, established construction companies in Michigan and across the Midwest. These are legitimate businesses that do the right thing, pay good wages and pay employees what they’ve earned. They pay taxes. They contribute to workers compensation insurance.

They are our partners in training and educating Michiganders to become the best workers on any jobsite. Payroll fraud negatively affects these upstanding companies. Here’s how: When a company steals from its workers, that company can unfairly reduce its costs and underbid legitimate companies that follow the rules.

We believe everyone should play by the same set of rules on a level playing field. Payroll fraud is a crime that gives some businesses an unethical and dishonest leg up that hurts workers and other businesses.

Michigan Capitol | Susan J. Demas

Nessel’s creation of a special enforcement unit to investigate and punish lawbreakers is an important step in the right direction. It sends the message to criminals that the days of stealing from workers and cheating on their taxes are over. Legislators are proposing new laws to require lawbreakers to pay back everything they owe, including lost wages and overtime, and to cover workers’ medical costs. These are strong protections against payroll fraud.

Because it happens in the dark, we must also encourage workers to come forward and share their stories. And proposals to protect and reward whistleblowers will achieve this goal.

We urge all legislators to act immediately on this issue. By cracking down on payroll and tax fraud, and criminals who cheat their own workers, we are standing up for all Michigan families.

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Lisa Canada
Lisa Canada

Lisa Canada is the political and legislative director for the Michigan Regional Council of Carpenters and Millwrights, one of the most active political organizations in the state of Michigan, representing over 14,000 union carpenters. She has more than 20 years experience working with organized labor, politics and government affairs.