Michigan is getting tough on payroll fraud and misclassification of workers as independent contractors. Separately, legislators in Nevada introduced a bill aimed at fighting misclassification.

Michigan. This week, Michigan Attorney General Dana Nessel said her office is forming a “payroll fraud enforcement unit” to handle complaints of payroll fraud and misclassification.

“Without enforcement and regulations that have real teeth, bad actors will continue to break the law, steal from their workers and shortchange Michigan taxpayers,” Nessel said.

Misclassification and paying workers off the books together cost Michigan taxpayers $107 million a year through tax fraud, according to Nessel’s office. It also says unscrupulous businesses stole an estimated $429 million in wage and overtime pay from Michigan workers between 2013 and 2015.

In addition to the task force, Democrats in the Michigan legislature plan to introduce several pieces of legislation aimed at:

  • Increasing civil and criminal penalties for payroll theft.
  • Strengthening whistleblower protections and creating incentives to turn in violators.
  • Auditing companies that commit violations.
  • Requiring companies that cheat workers to pay back wages.

“Cracking down on payroll fraud is a nonpartisan issue; it hurts all Michiganders,” Michigan House Democratic Leader Christine Greig said. “Companies that cut corners are getting a free ride off the backs of hard-working Michigan families and they are hurting legitimate businesses that follow the rules.”

Nevada. Meanwhile, in Nevada three state senators introduced a bill last month that would require several state agencies to share information for the purpose of fighting misclassification. The legislation, Senate Bill 493, would also create a task force to fight misclassification.

The 10-member task force would include representatives from state agencies as well as employers, labor interests and the public. It would evaluate current Nevada policies regarding misclassification and develop recommendations on how to reduce it. The bill calls for the task force to deliver a report on its finding by July 1, 2020, and then further reports would be required by July 1 in subsequent years.