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Report: Wage theft, payroll fraud hurting construction workers

Posted by National Alliance for Fair Contracting on

By JONAH CHESTER (April 11, 2022)

MADISON – A new report finds declining wages in the construction industry, fueled by wage theft and payroll fraud, are pushing more construction workers into social-support programs.

The analysis, by the Labor Center at the University of California-Berkeley, found between about 12% to 21% of construction workers across the country are either misclassified as independent contractors or paid under the table, depriving them of health insurance and other employer-provided benefits.

Peter Barca, secretary of the Wisconsin Department of Revenue, said the practice is cheating.

“These scammers, many of whom are coming into the state surreptitiously, they’re cheating the state out of revenue,” Barca asserted. “Worse, they’re cheating workers by misclassifying them. They’re cheating law-abiding companies within the state, and they really cheat everybody.”

The report noted 15% of construction workers in Wisconsin do not have health insurance, more than twice the rate of all workers in the state, and $207 million is spent annually on social-support programs, such as SNAP and Medicaid, to support families of construction workers.

Last month, a task force empaneled by Gov. Tony Evers released new recommendations to tackle wage theft and payroll fraud, which include bolstering penalties and tracking policies for the illegal practices.

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Construction Business Group redoubles efforts to root out misclassification (WI)

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If drywall and flooring could talk, it’d probably have a dark story to tell about Wisconsin’s ongoing construction boom. Behind projects big and small, say people close to the industry, there thrives an underground economy made up of contractors who cheat their workers out of wages and benefits to deliver projects on time and under budget.

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Other Views: Prevailing wage laws have widespread support (WI)

Posted by National Alliance for Fair Contracting on

By Andrew Disch
July 10, 2019

A spokesperson for Wisconsin Manufacturers & Commerce recently told the Wisconsin State Journal, “We don’t want to make it too comfortable to remain unemployed.” Currently, the maximum weekly unemployment benefit is $370. Who on this planet describes $370 a week as “comfortable”?

The president of the Associated Builders & Contractors has cited “inflated wages” in opposition to prevailing wage. Are rising wages on Main Street somehow a bad thing?

The perspectives from corporate groups such as WMC and ABC are relevant to understand their criticisms of prevailing wage laws.

Now here’s a mainstream perspective:

Prevailing wage laws require that construction workers on public construction projects be paid wages offered on similar jobs sites by local Wisconsin workers. It is widely recognized there is a worker shortage in the trades, and in order for the next generation to pursue these careers, it needs to make financial sense.

Should we expect a person who completes a multiyear apprenticeship program and performs physically demanding work in extreme conditions be paid wages so low that they are unable to obtain a middle-class lifestyle?

Prevailing wage and Wisconsin’s low bid law have held a close association. (The low bid law generally requires public construction projects be awarded blindly to the lowest bidder). While opponents of prevailing wage frequently mention the “free market,” certainly they would agree that the low bid law falls outside of it.

When building a house, most consumers conduct some investigation into the credibility of the builders submitting bids rather than accepting the lowest bid sight unseen. That is the free market. Prevailing wage ensured a level playing field among bidders within the low bid system. It held accountable out-of-state contractors that don’t pay Wisconsin taxes or Wisconsin wages.

Since prevailing wage’s repeal, these carpetbagging shops increased their share of public work here substantially.

…

Andrew Disch is the political director for the North Central States Regional Council of Carpenters.

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OPINION: Prevailing-wage repeal, not as benign as some would have you believe

Posted by National Alliance for Fair Contracting on

By: Dan Shaw
May 3, 2019 11:48 am

Prevailing-wage laws require that construction workers on public construction projects be paid the wages and benefits offered on similar jobs performed by local Wisconsin workers.

This is by no means an extreme idea. In fact, in a recent poll, 83% of the respondents who identified themselves as likely Wisconsin voters said they believe that bid prices for public works should take into account wages and benefits that are comparable to those paid in the same trades elsewhere in the state. Sixty-one percent specifically said they support prevailing-wage laws.

In other words, the public understands that public-works projects should stimulate the local and state economy by properly paying Wisconsin workers. John Mielke and the organization he runs, the Associated Builders and Contractors of Wisconsin, clearly disagree.

After the repeal of state prevailing-wage laws for municipal projects, we saw a nearly 40% increase from 2015 to 2018 in the number of out-of-state contractors winning municipal public works projects in Wisconsin. In 2018 alone, more than $160 million worth of municipal public-works projects were awarded to out-of-state contractors.

For every dollar of construction value that is completed by an out-of-state contractor, economic activity decreases by $2.26 in Wisconsin. In 2018, Wisconsin lost more than $361 million worth of economic activity by having out-of-state contractors perform these local taxpayer-funded projects. It is too soon to measure the effects of losing prevailing-wage protections on state-funded projects, but we can all assume the outcomes will be similar.

I agree with Mr. Mielke that the U.S. economy is growing and that contractors in Wisconsin are scrambling to find skilled workers. Simple principles of supply and demand require the wages of these workers to increase.

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WI DWD Holds Worker Misclassification Roundtable (WI)

Posted by National Alliance for Fair Contracting on

05/14/19
WorkersCompensation.com

Waukesha, WI – The Department of Workforce Development (DWD), in collaboration with State Council of Carpenters and Painting and Allied Trades, held a Worker Misclassification Roundtable in Waukesha yesterday to gather information and input on the issue of Worker Misclassification in Wisconsin. The roundtable was hosted by Building Services Incorporated.

“Under Governor Evers, the rights of workers are first and foremost, and by ensuring that employees are properly classified, we are providing workers with the confidence that in the event of a separation or workplace issue, they will have proper supports in place,” DWD Secretary Caleb Frostman said. “The input of our employer partners and other stakeholders on this issue is absolutely vital as we move forward with implementing Governor Evers’ Joint Taskforce to combat Worker Misclassification and Payroll fraud.”

Last year alone, UI Division auditors conducted 2,459 audits, identifying 8,677 misclassified workers and recouping more than $1.5 million in Unemployment Insurance (UI) taxes, interest and penalties due to their efforts. The issue isn’t isolated to the UI program alone. Misclassified workers are often times denied access to worker’s compensation and various labor and civil rights protections. Employers who misclassify workers obtain a competitive advantage over their peers. Without action on this important issue, Wisconsin stands to lose tax revenue, employers who play by the rules lose work, and workers suffer.

Under Wisconsin law, workers are presumed to be employees and subject to tax unless determined by law to be independent contractors. An employer found to be utilizing misclassified workers may be liable for additional tax, interest and penalties. Employers engaged in the construction trades may also be subject to a stop work order. In addition, employers engaged in the painting or drywall finishing of buildings or other structures who willfully provide false information to DWD for the purpose of misclassifying or attempting to misclassify a worker as an independent contractor can be fined $25,000 for each violation.

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Milwaukee Building and Construction Trades Council Statement on Gov. Evers’ signing Executive Order to Protect Wisconsin Workers (WI)

Posted by National Alliance for Fair Contracting on

“Standing with working families, Governor Tony Evers’ took a huge step to protect Wisconsin from corrupt employers who cut costs by scamming workers and the state of Wisconsin.”

By Milwaukee Building and Construction Trades Council
Apr 15th, 2019 02:39 pm

MILWAUKEE – Milwaukee Building and Construction Trades Council Statement President Dan Bukiewicz released the following statement in response to Gov. Evers’ signing Executive Order #20 to Protect Wisconsin Workers:

“Standing with working families, Governor Tony Evers’ took a huge step to protect Wisconsin from corrupt employers who cut costs by scamming workers and the state of Wisconsin. It’s refreshing to have a governor not only focused on what is best for workers and Wisconsin’s future. I applaud Governor Evers for taking immediate action to protect the middle class,” said Milwaukee Building and Construction Trades Council Statement President Dan Bukiewicz.

“Contracted work is an often-overlooked driver of eroding labor standards, rising income and wealth inequality, persistent structural racism and occupational segregation, and the shifting of power away from workers and toward corporations.

Many industries in which people of color are over represented are characterized by the widespread use of independent contractors. These contracted jobs offer no unemployment insurance protections or even a minimum wage,”added Bukiewicz.

(See Article)

(See PDF Copy of Executive Order)

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Frostman column: Rewarding Wisconsin workers (WI)

Posted by National Alliance for Fair Contracting on

By Caleb Frostman on Apr 2, 2019

Being a relative newcomer to politics and government, I’m astonished at how often the word “agenda” is thrown around. Listening to soundbites and reading headlines, apparently, everybody has one and they’re something to be afraid of.

From a professional communication standpoint, I just hope everyone’s agenda is neatly formatted with bulletpoints and is less than a page.

Having sifted and winnowed through what’s true from what’s false when it comes to bluster and hot air, I’ve come to interpret “agenda” as meaning a collection of values or a set of proposals that reflect, or when put into action would manifest, those values.

The values reflected by Gov. Evers’ 2019-21 budget proposals include equal opportunity, strategic investment and ensuring that all participants in Wisconsin’s workforce and economy have a fair shot at sustained economic well-being.

One of the specific proposals that most clearly articulates the values of investing wisely and providing opportunity for economic well-being is the restoration of prevailing wage in Wisconsin.

Wisconsinites have clearly stated that when their tax dollars are being used in public projects, they want the wages paid and benefits provided on those projects to stay in their community. And they want the wage to be a fair, living wage and the benefits to be family-supporting, representative of what is typical for that work in that area.

Too often, after the repeal of prevailing wage, out-of-state contractors are able to win bids on public projects by under-cutting local businesses. They pay their workers a low wage and provide inadequate benefits, while likely maintaining their top-line profi

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Evers would eliminate ‘swap’ mandate for federal transportation money (WI)

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By: Nate Beck March 8, 2019

Gov. Tony Evers’ proposed budget would undo a bill passed during the Legislature’s lame-duck session that would concentrate federal money into fewer highway projects to curtail prevailing-wage requirements and other federal regulations.

The provision tucked into Evers’ biennial budget request would waive a requirement passed during the Legislature’s December extraordinary session calling for federal money to make up 70 percent of the funding of large highway projects, or highway rehabilitation jobs worth less than $10 million. Packing federal money into fewer projects has long been a goal for some GOP lawmakers, who argue that doing that will save money by decreasing the number of projects that fall under federal Davis Bacon prevailing-wage requirements and other rules.

“It is frustrating that Gov. Evers wants to repeal a pro-taxpayer reform in order to pay back the special interests who championed his election,” said Duey Stroebel, R-Cedarburg. “Allowing the DOT to spread federal funds across numerous projects only increases the number of projects subject to costly federal mandates. If Gov. Evers wants to win support for increased transportation taxes, proposals like this that reduce efficiencies are not a good way to make that case.”

Evers’ budget, which Republicans derided as a liberal wish list, would undo many of the laws that the GOP-controlled legislature passed in a lame-duck session just before he took over as Governor in early January. The budget would also reinstate a number of policies eliminated during the Walker administration, repeal the state’s right-to-work law and bring back prevailing wage on state projects.

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Evers takes aim at right-to-work law, seeks prevailing-wage protections (WI)

Posted by National Alliance for Fair Contracting on

By Michael Carroll
3-7-2019

Gov. Tony Evers has called for the repeal of Wisconsin’s right-to-work law and the restoration of prevailing-wage guarantees in public-works projects, despite critics’ concerns that those proposals could become a drag on the state’s economy.

The governor’s February budget blueprint supports the elimination of the state’s right-to-work statute, which restricts private employers from entering into agreements that compel union membership as a condition of employment or mandating the payment of dues to a labor union.

Evers also supports the restoration of the prevailing wage on state and local public-works projects to ensure that workers are not underpaid in comparison to employees performing similar tasks in the region.

…

Restoring the prevailing wage would be helpful to both the construction industry and the employees who work in it, according to Emspak. Allowing companies with public-works contracts to pay their workers less than their counterparts in a region means those firms are undercutting the competition by cutting labor costs, which in turn drives down wages and working conditions, he said.

Having the prevailing wage in place means the construction companies would be in a better position to focus on providing high-quality, skilled work at a competitive cost, according to Emspak.

Labor union officials generally support Evers’ proposals. Stephanie Bloomingdale, president of the Wisconsin AFL-CIO, said Evers’ budget blueprint strikes the right note for workers and the state’s economy.

“The repeal of right to work is a step towards a healthier middle class with strong union rights,” Bloomingdale said in a prepared statement. “Restoring prevailing wage and the right to a project labor agreement will grow our economy with family-supporting jobs while ensuring tour construction projects are completed safely on time and on budget.”

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Changes To State Highway Funding Rules Passed During Lame-Duck Session

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Transportation Experts Say Measure Aims To Allow DOT To Avoid Federal Wage Requirements On Some Highway Projects

Thursday, December 6, 2018, 5:25am
By Rich Kremer

Legislation passed during the Legislature’s lame-duck session could change how Wisconsin pays for major highway projects. Transportation insiders say the tweaks are meant, by lawmakers, to be a way for the state to avoid federal wage requirements.

The first bill approved by lawmakers during this week’s extraordinary session makes changes to how the Wisconsin Department of Transportation funds highway megaprojects, like those in southeastern Wisconsin and other major state highway projects throughout the state, by requiring at least 70 percent of the project be funded with federal dollars.

Under current law, the DOT uses a combination of federal and state dollars, but for megaprojects and other major highway improvements there isn’t a set minimum for federal funds.

Former DOT Secretary Mark Gottlieb said that change is significant because federal funds carry with them federal requirements that contractors be paid wages set by the U.S. Department of Labor.

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