Detailed explanation of statutory authority for the rule, including the statutory citation and language
Section 111.327, Stats., provides "Any employer described in s. 108.18 (2) (c) or engaged in the painting or drywall finishing of buildings or other structures who willfully and with intent to evade any requirement of this subchapter misclassifies or attempts to misclassify an individual who is an employee of the employer as a nonemployee shall be fined $25,000 for each violation. The department shall promulgate rules defining what constitutes a willful misclassification of an employee as a nonemployee for purposes of this section and of ss. 102.07 (8) (d) and 108.24 (2m)." Estimate of amount of time that state employees will spend developing the rule, and other resources necessary to develop the rule
The total amount of staff time is estimated to be 40 hours.
List with description of all entities that may be affected by the proposed rule
The entities that may be affected by the proposed rule are employers engaged in the construction of roads, bridges, highways, sewers, water mains, utilities, public buildings, factories, housing, or similar construction projects, or engaged in the painting or drywall finishing of buildings or other structures that knowingly misclassifying employees as independent contractors.
Summary and preliminary comparison with any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule
The U.S. Department of Labor (USDOL) enforces the Fair Labor Standards Act, 29 U.S.C. 201. USDOL has the authority to investigate worker misclassification in virtually all types of businesses within the United States, with relatively few exceptions. By contrast, Wisconsin statutes limit penalties for willful misclassification of employees to employers that are involved in the construction industry. The U.S. Internal Revenue Service (IRS) also investigates worker classification cases. The IRS is granted this authority in the Internal Revenue Code.
Anticipated economic impact of implementing the rule (note if the rule is likely to have an economic impact on small businesses)
The proposed rule is anticipated to have a positive impact on businesses, including small businesses, who properly classify their employees, by reducing the impact of employers that knowingly misclassify employees as independent contractors and accordingly do not pay unemployment insurance taxes, avoid workers compensation insurance and do not withhold state, federal and social security taxes.
Contact Person: Mike Myszewski by telephone (608) 261-5835.
