Skilled Construction Trades and Respected Contractors
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Welcome to Construction Business Group's Industry Updates. This monthly e-newsletter will help us communicate the important initiatives that we have underway and relevant updates on issues that impact Wisconsin's construction industry.
Message from Executive Director
Robb Kahl
As CBG reported in April,
Executive Order #20 aims to streamline enforcement of payroll fraud and protect the taxpayers of Wisconsin. Worker misclassification, also known as payroll fraud, is an illegal business model that is slowly eroding the construction industry in Wisconsin.
Recently, some entities have suggested that targeting misclassification for enforcement is an assault on independent contractors. This allegation is entirely false. Legitimate independent contractors have an important role in the construction industry. True independent contractors own their own business, operate independently, have control over the work they do and the jobs they take, and are nimble enough to handle small jobs that many contractors cannot accommodate.
But all too often, the label "independent contractor" is applied to workers who are employees for purposes of State and Federal law. Due to CBG's investigatory compliance work, I know that payroll fraud is particularly prevalent in the construction industry. This fact is supported by the DWD, which recently reported that 62% of unemployment insurance misclassification investigations are in the construction industry.
The Executive Order creates the Joint Enforcement Task Force on Worker Misclassification, and it is the illegal practice of payroll fraud-not legitimate independent contractors-that the Task Force is charged with addressing. Last week, Governor Evers announced the Task Force appointments.
The 18-person Task Force is comprised of a diverse mix of agency staff, legislators, and public members. The public members represent trade associations, construction trades, union contractors and non-union contractors. The Task Force members are as follows:
DWD Secretary or designee: Sec. Caleb Frostman (Task Force chair)
Attorney General or designee: Michael Morris
DOR Secretary or designee: Maria Guerra Lapacek
OCI Secretary or designee: Andrew Stoughton
DWD Worker's Compensation Division: Steve Peters
DWD Unemployment Insurance Division: Mark Reihl
DWD Equal Rights Division: Jesus Villa
Workers Representative: Andy Buck
Business Community Representative: Pete Braun
Senate Majority Caucus: Sen. Dale Kooyenga
Senate Minority Caucus: Sen. Dave Hansen
Assembly Majority Caucus: Vacant
Assembly Minority Caucus: Rep. Chris Sinicki
Public Member: Cynthia Buchko
Public Member: Stu Wilson
Public Member: Jerry Shea
Public Member: Gary Rockweiler
Public Member: Tim DeMinter
CBG will keep you informed on the work of the Task Force in the coming months.
Shortly after taking office, President Trump issued an Executive Order in which he directed the Environmental Protection Agency (EPA) to conduct a thorough review of the Clean Power Plan (CPP) - the cornerstone of the Obama Administration's national strategy to combat global warming - and implement an alternative plan.
By way of background, the CPP would have required states to reduce carbon dioxide emissions by 30% by 2030 through substantial reductions in carbon dioxide emissions from existing coal-fired power plants, greater use of natural gas and renewable resources to generate electricity and significant investments in energy efficiency. The United States Supreme Court halted implementation of the CPP pending the resolution of legal challenges to it.
On June 19, the EPA finalized its alternative to the CPP. The Affordable Clean Energy (ACE) rule establishes emissions guidelines for states to use when developing plans to limit carbon dioxide emissions at their coal-fired power plants. States will have three years to submit plans to the EPA. Approximately 600 coal-fired power plants could be covered under the ACE rule.
The EPA projects annual ACE compliance costs in 2030 to reach $280 million. By comparison, annual compliance costs with the CPP were projected to reach $8.8 billion in 2030. Under the ACE rule, increases in monthly electric utility bills will be far less impactful.
According to the EPA, the implementation of the ACE rule, combined with emission reductions expected from industry trends, will reduce carbon dioxide emissions from the electric sector by as much as 35% below 2005 levels in 2030. It is worth noting that the United States is currently leading the global effort to reduce carbon dioxide emissions.
The federal Energy Information Administration (EIA) found that United States energy-related carbon dioxide emissions fell by 14% between 2005 to 2017, with coal-related carbon dioxide emissions down 39% over that period. During that time, global energy-related carbon dioxide emissions rose by 21%.
Combating global warming is a worthy national public policy goal, but it must be done in a manner that does not lead to substantial increases in monthly electric utility bills. The ACE rule accomplishes these objectives.
Exposing Wage Theft Without Fear: States Must Protect Workers from Retaliation
NELP
June 24, 2019
Around the country, workers who speak up about workplace violations often face a significant risk of retaliation by their employer. Yet our laws generally place the burden on workers to come forward and report violations, either through complaints filed with enforcement agencies or through lawsuits filed in state or federal court. Government investigations or audits of employers are relatively rare. Retaliation is therefore one of the most pressing and persistent challenges to effective enforcement of our workplace laws-workers should not fear that their employer will punish them for asserting their rights. Ultimately, any law intending to protect workers' rights must protect workers from retaliation in order to make that law a reality.
Why Do Workers Experience Retaliation?
Workers in the U.S. generally bear the burden of enforcing their own labor protections-it is up to them to come forward to report violations.
When a worker comes forward to report a workplace violation, we know that employers often retaliate or threaten to retaliate against the worker.
Under our current system, workers bear the entire risk of retaliation from their employer when they report violations.
Contractor sentenced to 8 years in prison in forced labor case (CA)
AUTHOR - Kim Slowey
PUBLISHED - July 3, 2019
A federal judge sentenced construction company owner Job Torres Hernandez to eight years and seven months in prison for harboring undocumented workers for commercial advantage or private financial gain and for forcing some of those individuals into providing labor on projects in the San Francisco Bay Area.
Torres, who was convicted in March, must also pay $919,738 in unpaid wages as restitution and must serve three years under supervised release after his prison term ends.
One of the most disturbing aspects of the Torres case is worker testimony that, since 2015, he recruited undocumented individuals from Mexico with the promise of construction jobs only to make some work as long as 24 consecutive hours without pay. He locked them up after hours in squalid living spaces with makeshift beds and limited access to toilets and showers. If they complained, witnesses told the court, Torres threatened deportation and physical harm to them and their families in Mexico.
Nessel exploring criminal, civil charges in payroll fraud cases (MI)
By Derek Robertson
State Attorney General Dana Nessel announced Tuesday that her office could soon file criminal or civil charges against Michigan businesses accused of payroll fraud.
In a statement, a Nessel spokesperson wrote that by the end of the week her office "will have sent letters demanding business records to at least 10 businesses operating in Michigan and plans to use subpoenas and warrants in other cases to obtain vital information from Michigan-based businesses allegedly operating fraudulent payroll schemes."
"No family should live in poverty because greedy businesses cheat the system and refuse to play by the rules," Nessel said in her statement. "This has gone on for far too long and Michigan isn't going to wait any longer to crack down on these crimes."
Case study links inexperience to injuries in Tennessee construction industry (TN)
Safety & Health Magazine
May 29, 2019
Knoxville, TN - Nearly half of the construction workers in Tennessee who were injured over a recent two-year period had been on the job less than a year, according to a recent case study report from the Center for Construction Research and Training - as known as CPWR.
Analyzing more than 9,000 statewide workers' compensation claims for injuries that occurred in 2014 and 2015, researchers at the Construction Industry Research and Policy Center at the University of Tennessee found that 44.5% of the claims were from workers who had less than a year of experience in construction, while 30.1% were from workers who had less than six months of experience.
