By: - August 29, 2019 4:02 pm

Attorney General Dana Nessel | Susan J. Demas

As Michigan Democrats continue taking aim at the issue of payroll fraud, Attorney General Dana Nessel announced Wednesday that her office charged 13 felonies as part of its clampdown on the issue. 

The attorney general’s office said it charged Lansing small business owner Camron Gnass with multiple counts of larceny, conducting a criminal enterprise and other charges. 

Gnass allegedly did not deposit money into his employee’s retirement accounts. He told the Lansing State Journal it was an “accounting error.”

“Employees putting money aside for their retirement shouldn’t have to think twice about whether that money made it into their savings accounts,” Nessel said in a statement. “When businesses exploit their workers by cheating them out of their hard-earned money, families have less in their pockets and an uncertain future. This has gone on for far too long and Michigan isn’t waiting any longer to crack down on payroll fraud crimes.” 

In April, Nessel formed a “Payroll Fraud Enforcement Unit” to investigate claims of such fraud, which usually takes the form of employee misclassification, failure to pay overtime and outright wage theft.

Prior to Labor Day weekend, members in both the state House and Senate announced on Thursday several bills aimed at increasing protections for worker classification that they say can allow businesses to misclassify employees and pay them less. 

As the Advance has previously reported, such practices cost Michigan workers about $429 million in lost wages between just 2013 and 2015, according to a 2017 report by the Economic Policy Institute, a left-leaning policy think tank in Washington, D.C.

The legislation introduced on Thursday would strengthen whistleblower protections for employees who report misclassification, toughen penalties and allow for reimbursement of back-pay for those experience payroll fraud. 

“For too long, bad actors have brazenly broken the law to give themselves an unfair advantage over businesses that play by the rules,” state Senate Minority Leader Jim Ananich (D-Flint), said in a statement. “Companies that refuse to pay their workers their full wages and overtime, and dodge taxes that the rest of us pay, should not be allowed to undercut legitimate businesses and their employees. Our bipartisan proposal will level the playing field, protect workers and crack down on shady companies that cheat.”

Mari Manoogian

The Senate bills did not appear to be in the Legislative website yet, but the House measures are HB 48684879.

As part of the package, state Rep. Mari Manoogian (D-Birmingham) introduced HB 4874 banning the use of non-compete agreements in low-wage jobs. The practice has come under fire nationally in recent years.

 “When it comes to low-wage industries, non-competes are often predatory, used as a tool to encourage employees to keep their mouths shut about bad business practices or to allow employers to artificially keep wages low,” said Manoogian. “Not only does that put good businesses at a disadvantage, it robs hardworking Michiganders of their chance to earn what they’re worth.”

Manoogian cited a recent study showing job mobility in Michigan fell by 8% after the state began allowing the use of non-compete agreements. The bill defines ‘low wage’ as less than any of the following: $15 per hour; 150 percent of the mandated minimum wage; or annual compensation of $31,200, which would be adjusted for inflation annually by the state treasurer. The legislation would also require notice of non-compete agreements be given to prospective job applicants in cases where their use is still permitted.

Advance Editor Susan J. Demas contributed to this story.

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Nick Manes
Nick Manes

Nick Manes is a former Michigan Advance reporter, covering West Michigan, business and labor, health care and the safety net. He previously spent six years as a reporter at MiBiz covering commercial real estate, economic development and all manner of public policy at the local and state levels.