LocalMichiganNews

Michigan bills target payroll fraud, bolster AG’s crackdown

(95.3 MNC)

LANSING, Mich. (AP) — Michigan Democrats are eager to bolster the state attorney general’s planned crackdown on payroll fraud with a series of bills aimed at closing gaps they say let business owners escape unpunished.

The measures would toughen criminal penalties, protect whistleblowers, target the misclassification of employees as independent contractors and put restrictions on non-compete agreements. Another bill would let the state, local governments and workers sue bad actors who may be shielded from individual liability.

“This crime robs workers and taxpayers of hundreds of millions of dollars every single year, and too often offenders escape accountability and punishment,” House Minority Leader Christine Greig, a Farmington Hills Democrat, said Thursday while announcing the legislation at the Michigan AFL-CIO headquarters in Lansing. “Michigan cannot afford to turn a blind eye to the severe problem of payroll fraud.”

While just one Republican is listed as a co-sponsor — on a single bill in the 12-bill package — Greig said the “dialogue has started” with GOP lawmakers who control the Legislature and she is hopeful “we can come together because who isn’t there to support workers?”

The measures were introduced more than four months after Democratic Attorney General Dana Nessel said her office would target businesses that cheat their employees of wages, pledging a forceful crackdown on what she called an under-the-radar problem that also lets companies dodge taxes. Nessel established a Payroll Fraud Enforcement Unit to investigate wage theft, including the misclassification of workers as independent contractors and the nonpayment of overtime.

“The only thing that’s really missing at this point that would allow us to best move forward with enforcement is the proper laws that we need that have actual teeth in them,” Nessel said.

An employer who, with the intent to defraud, fails to pay wages and fringe benefits to an employee is guilty of a misdemeanor punishable by a $1,000 fine under existing law. Bills in the House and Senate would increase the penalty for a first offense to up to a year in jail and subject repeat offenders to a felony punishable by up to two years in prison and a $10,000 fine.

“I don’t understand why payroll fraud is considered to be less offensive to us than all other kinds of crime,” Nessel said. “Just because it’s white-collar crime doesn’t make it less impactful. … Stealing is stealing is stealing, and that’s the message that we want to send.”

Democrats pointed to an analysis from the liberal-leaning Economic Policy Institute estimating that unscrupulous businesses “stole” $419 million in wages and overtime pay from Michigan workers between 2013 and 2015. A Michigan State University study showed that worker misclassification costs governments $107 million per year in tax revenue.

Nessel has said payroll fraud is most prevalent in the construction, landscaping, janitorial services, child care, beauty and personal care services, retail, food service, car wash and home health care industries.

Nessel this past week issued the first charges originating from the unit she created in April. Lansing business owner Camron Gnass faces 13 felony counts for allegedly withholding more than $52,000 from at least two employees’ paychecks for deferred retirement contributions but not depositing the funds into their accounts or paying the employer match. Gnass, who owns a small branding and design studio, is accused of using the money for his own personal gain.

He issued a statement saying the charges stem from an error in the company’s payroll and accounting systems, and that the funds were never used for personal expenses. He said his firm has repaid more than 85% of what is owed.

“We recognize and respect the AG’s goal is to protect consumers and employees,” he said. “Our story is not fully or clearly told. We made an error. We are not proud of it but have worked to correct it. We told our former employees we would make them whole and have been working directly with them to do so.”

The bills will be referred to committees soon. Republican House Speaker Lee Chatfield has not had a chance to review them yet but plans to soon, a spokesman said.

Related posts

Deadly motorcycle crash being investigated in Van Buren County

Jon Zimney

Summer EBT applications now open, will benefit Hoosier students over summer

95.3 MNC

Indiana State Police Bremen Post K9 to receive protective vest donation

Jon Zimney

Leave a Comment