By James P. Hoffa
Published in the Detroit News, July 3, 2019
Businesses have been treating their workers as independent contractors and shorting them much needed pay, benefits and job security for years. Now, Michigan is doing something about it.
Efforts of Attorney General Dana Nessel and some state lawmakers resulted in the creation of a new unit intended to tackle the issue. The unit will focus on the misclassification of workers as contractors by companies trying to avoid paying overtime, health benefits or worker’s compensation.
There is a lot at stake, not just for affected workers, but for the state as well. The Economic Policy Institute found businesses bilked some 2.8 million Michigan workers of $429 million in wages and overtime pay from 2013 to 2015. Meanwhile, a Michigan State University report found the state is shortchanged $107 million a year in tax revenue by companies not properly classifying their workers and paying them off the books, and not contributing to the state’s unemployment insurance fund.
To fight that, Nessel's new Payroll Fraud Enforcement Unit will probe payroll fraud and misclassification claims, joining with other state agencies where necessary to take action using existing law to crack down on illegal practices to assist hardworking Michiganians.
In an effort to spur additional action, lawmaker allies are offering companion legislation that will increase civil and criminal penalties for payroll theft; beef up whistleblower protections and create incentives to report violators; audit companies that commit violations; and mandate that businesses breaking the law pay back workers.
The Teamsters have been at the forefront of fighting misclassification in other states. In California, for example, they have pushed to get back wages for port truck drivers whose employers insist are independent contractors. In the latest effort, that fight led to 10 port truck drivers who haul cargo for Best Buy, Puma and Lowe’s being awarded more than $1.2 million in April by the California Labor Commissioner for wage theft due to misclassification.
Misclassification is not just a truck-driving problem, of course. It’s an issue for those working in a host of industries such as construction, landscaping and custodial services. But the effort to bring the practice to an end shouldn’t be viewed negatively by those in the private sector.
In fact, many companies are being hurt by misclassification as well. Businesses that shirk their tax responsibilities by not paying their fair share are gaining an advantage in the marketplace, which hurts those employers that play by the rules. That’s not right or just.
At a time when many corporations continue to pocket huge profits, government must look out for the interest of workers who deserve to be treated with dignity on the job. It is good to see Michigan sees the value in treating everyday Michiganians with respect so they can support their families.