GMM&JTK:bjk:md
2009 - 2010 LEGISLATURE
April 7, 2010 - Introduced by Senators Wirch, Coggs, Hansen and Lehman,
cosponsored by Representatives
Parisi, Sinicki and
Van Akkeren. Referred to
Committee on Labor, Elections and Urban Affairs.
SB672,1,4
1An Act to amend 103.005 (10); and
to create 103.06 of the statutes;
relating
2to: compliance by employers with certain laws whose enforcement depends on
3the proper classification of persons as employees or nonemployees and
4providing penalties.
Analysis by the Legislative Reference Bureau
Under current law, an employer engaged in the construction of roads, bridges,
highways, sewers, water mains, utilities, public buildings, factories, housing, or
similar construction projects (employer) who misclassifies an employee as a
nonemployee willfully and with intent to evade any requirements of the laws relating
to worker's compensation or unemployment insurance is subject to a $25,000 fine for
each violation.
This bill requires the Department of Workforce Development (DWD), for
purposes of promoting and achieving compliance by employers with certain
employment laws through the proper classification of persons performing services
for an employer as employees and nonemployees, to do all of the following:
1. Educate employers, employees, nonemployees, and the public about the
proper classification of persons performing services for an employer as employees
and nonemployees.
2. Refer complaints of misclassification of employees as nonemployees to other
state or local agencies that administer laws whose enforcement depends on the
proper classification of employees and cooperate with those state or local agencies in
the investigation and enforcement of those laws.
The bill also permits DWD, for purposes of ensuring that an employer is
properly classifying the persons performing services for the employer as employees
and nonemployees, to investigate allegations that an employer is in violation of
certain requirements under the employment laws. Those requirements
(employment law requirements) are as follows:
1. That the employer is maintaining records identifying all persons performing
work for the employer, including the name, address, and social security number of
each of those persons.
2. That the employer is maintaining worker's compensation coverage for its
employees as required under the worker's compensation law.
3. That the employer has provided to DWD the information that employers are
required to provide with respect to newly hired employees.
4. That the employer is maintaining records of the hours worked by its
employees, the wages paid to those employees, any deductions from those wages, and
any other information that the employer is required to keep under rules promulgated
by DWD relating to hours of labor and the minimum wage, and is listing deductions
from wages as required under current law.
5. That the employer is in compliance with the unemployment insurance laws.
If DWD determines that an employer has failed to demonstrate compliance
with the employment law requirements, DWD may serve on the employer a notice
of DWD's intent to issue an order requiring the employer to stop work (stop work
order) at the locations specified in the notice. The notice must advise the employer
that the stop work order will be issued within three business days after the date of
the notice unless the employer provides information satisfactory to DWD indicating
that the employer is in compliance with the employment law requirements at each
location specified in the notice.
If within three business days after service of the notice an employer does not
demonstrate compliance with the employment law requirements, DWD may serve
a stop work order on the employer, which takes effect as provided in the order unless
the employer appeals the order by requesting a hearing to review the stop work order,
in which case the stop work order is automatically stayed until the date on which a
decision on the appeal is issued. An employer that does not stop work as required
under a stop work order may be required to forfeit $250 for each day beginning on
the day on which the stop work order is served and ending on the day on which the
employer provides evidence satisfactory to DWD that it has stopped work or is in
compliance with the employment law requirements, whichever occurs first. The stop
work order remains in effect until the employer provides evidence satisfactory to
DWD that it is in compliance with the employment law requirements and pays the
forfeiture required under the bill.
A request for a hearing to review a stop work order must be filed within ten days
after service of the order. If a request for a hearing is filed within those ten days, an
appeal tribunal, which is an attorney licensed to practice in this state who is
appointed by DWD to conduct review hearings, must hold the hearing within 14 days
after receipt of the request and issue a decision in writing within seven days after
the hearing affirming, reversing, or modifying the order to stop work and forfeiture.
If the appeal tribunal finds that the employer has not complied with the employment
law requirements, the automatic stay of the stop work order is lifted and the order
remains in effect until the employer provides evidence satisfactory to DWD that the
employer is in compliance with the employment law requirements and pays the
forfeiture.
The employer or DWD may request a review of an appeal tribunal's decision by
petitioning the Labor and Industry Review Commission (LIRC) for review of the
decision within 21 days after the decision was mailed to the employer's last-known
address and may commence an action for the judicial review of a decision of LIRC
within 30 days after the decision was mailed to the employer's last-known address.
A stop work order that is in effect remains in effect during the pendency of a review
by LIRC or an action for judicial review. An employer that violates a final stop work
order of DWD or final decision of an appeal tribunal, LIRC, or a court affirming such
an order is subject to a forfeiture of $1,000 for each day of violation. An employer may
seek review of a forfeiture imposed for a violation of a final stop work order or final
decision affirming such an order in the same manner as an initial stop work order
is reviewed under the bill.
Finally, the bill provides that an investigation, order, or decision under the bill
does not preclude or otherwise impair or affect any other action that is required or
permitted under the employment laws of this state to enforce a requirement under
any of those laws.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
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103.005
(10) Except as provided in ss.
103.06 (5) (d), 103.275 (2) (bm) and (br),
4103.34 (10) (b) and (c), 103.91 (4) (b) and (c), 103.92 (6) and (7), 104.07 (5) and (6), and
5105.13 (2) and (3), orders of the department under chs. 103 to 106 shall be subject to
6review in the manner provided in ch. 227.
SB672, s. 2
7Section
2. 103.06 of the statutes is created to read:
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8103.06 Worker classification compliance. (1) Definitions. In this section:
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(a) "Business day" means any day on which the offices of the department are
10open.
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1(b) "Employee" means any of the following who is employed by an employer:
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1. For purposes of compliance with the requirement specified in sub. (3) (a) 1.,
3an employee, as defined in s. 103.001 (5).
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2. For purposes of compliance with the requirement specified in sub. (3) (a) 2.,
5an employee, as defined in s. 102.07.
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3. For purposes of compliance with the requirement specified in sub. (3) (a) 3.,
7an employee, as defined in rules promulgated under s. 103.05.
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4. For purposes of maintaining records under sub. (3) (a) 4. as required under
9rules promulgated under s. 103.02, an employee, as defined in s. 103.001 (5).
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5. For purposes of maintaining records under sub. (3) (a) 4. as required under
11rules promulgated under s. 104.04, an employee, as defined in s. 104.01 (2).
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6. For purposes of listing deductions from wages under sub. (3) (a) 4. as required
13under s. 103.457, an employee, as defined in s. 103.001 (5).
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7. For purposes of compliance with the requirement specified in sub. (3) (a) 5.,
15an employee, as defined in s. 108.02 (12).
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(c) "Employer" means any of the following that is engaged in the work described
17in s. 108.18 (2) (c):
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1. For purposes of compliance with the requirement specified in sub. (3) (a) 1.,
19an employer, as defined in s. 103.001 (6).
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2. For purposes of compliance with the requirement specified in sub. (3) (a) 2.,
21an employer, as defined in s. 102.04.
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3. For purposes of compliance with the requirement specified in sub. (3) (a) 3.,
23an employer, as defined in rules promulgated under s. 103.05.
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4. For purposes of maintaining records under sub. (3) (a) 4. as required under
25rules promulgated under s. 103.02, an employer, as defined in s. 103.01 (1).
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15. For purposes of maintaining records under sub. (3) (a) 4. as required under
2rules promulgated under s. 104.04, an employer, as defined in s. 104.01 (3).
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6. For purposes of listing deductions from wages under sub. (3) (a) 4. as required
4under s. 103.457, an employer, as defined in s. 103.001 (6).
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7. For purposes of compliance with the requirement specified in sub. (3) (a) 5.,
6an employer, as defined in s. 108.02 (13).
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7(2) Worker classification compliance; duties of department. For purposes of
8promoting and achieving compliance by employers with the laws specified in sub. (3)
9(a) through the proper classification of persons performing services for an employer
10as employees and nonemployees, the department shall do all of the following:
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(a) Educate employers, employees, nonemployees, and the public about the
12proper classification of persons performing services for an employer as employees
13and nonemployees.
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(b) Receive and investigate complaints alleging violations of the requirements
15specified in sub. (3) (a), or investigate any such alleged violations on its own
16initiative, and, if the department finds that an employer is in violation of a
17requirement specified in sub. (3) (a), order the employer to stop work and pay a
18forfeiture as provided under sub. (5).
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(c) Refer complaints of misclassification of employees as nonemployees to other
20state or local agencies that administer laws whose enforcement depends on the
21proper classification of employees.
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(d) Cooperate with other state or local agencies in the investigation and
23enforcement of laws whose enforcement depends on the proper classification of
24employees.
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1(e) Appoint attorneys licensed to practice in this state as appeal tribunals to
2conduct hearings and issue decisions under sub. (6) (b).
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3(3) Compliance requirements. (a) For purposes of ensuring that an employer
4is properly classifying the persons performing services for the employer as employees
5and nonemployees, the department may require an employer to prove all of the
6following:
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1. That the employer is maintaining records identifying all persons performing
8work for the employer, including the name, address, and social security number of
9each of those persons.
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2. That the employer is maintaining worker's compensation coverage for its
11employees as required under s. 102.28 (2).
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3. That the employer has provided to the department the information required
13under s. 103.05 with respect to each newly hired employee of the employer.
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4. That the employer is maintaining records of the hours worked by its
15employees, the wages paid to those employees, any deductions from those wages, and
16any other information that the employer is required to keep under rules promulgated
17under s. 103.02 or 104.04, and is listing deductions from wages as required under s.
18103.457.
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5. That the employer is in compliance with ch. 108.
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(b) Any agreement between an employer and employee purporting to waive or
21modify any requirement under par. (a) is void.
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22(4) C
ompliance investigations. (a) The department may conduct
23investigations to ensure compliance with the requirements specified in sub. (3) (a).
24In conducting an investigation, the department may do any of the following:
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11. Enter and inspect any place of business or place of employment and examine
2and copy any records that the employer is required to keep under rules promulgated
3under s. 103.02 or 104.04; any books, registers, payroll records, records of wage
4withholdings, records of work activity and hours of work, and records or indicia of the
5employment status of persons performing work for the employer; and any other
6records relating to compliance with the requirements specified in sub. (3) (a).
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2. Determine the identity and activities of any person performing work at any
8location where the work described in s. 108.18 (2) (c) is being performed.
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3. Interview and obtain statements in writing from any employer or person
10performing work or present at any location where the work described in s. 108.18 (2)
11(c) is being performed with respect to the names and addresses of persons performing
12work for the employer, the payment of wages to and hours worked by those persons,
13and any other information relating to the remuneration of those persons and the
14nature and extent of services performed by those persons.
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(b) The department may conduct the activities under par. (a) 1. to 3. at any
16location where the work described in s. 108.18 (2) (c) is performed by or for an
17employer. In addition, the department may conduct the activities specified under
18par. (a) 1. at any other location where the records specified in par. (a) 1. are
19maintained by an employer or an agent of an employer.
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(c) If in the course of an investigation of an employer the department
21determines that there is reason to believe that the employer is not the prime
22contractor of the work being performed by or for the employer, the department shall
23seek to determine the identity of the prime contractor. If the department identifies
24any person other than the employer that it believes to be the prime contractor of the
25work being performed, the department, for informational purposes, shall serve on
1that person copies of any notices or orders served on the employer under sub. (5) with
2respect to the work. Failure of the department to serve a copy of a notice or order
3under sub. (5) on a person believed to be a prime contractor does not relieve the
4employer from any liability arising out of the notice or order or impair the
5department from pursuing any remedy relating to the notice or order.
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6(5) Stop work orders and civil penalties. (a) If after an investigation under
7sub. (4) the department determines that an employer has failed to demonstrate
8compliance with any of the requirements specified in sub. (3) (a), the department
9may serve on the employer a notice of the department's intent to issue an order
10requiring the employer to stop work at the locations specified in the notice. The
11notice shall advise the employer that the order will be issued within 3 business days
12after the date of the notice unless within those 3 business days the employer provides
13information satisfactory to the department indicating that the employer is in
14compliance with the requirements specified in sub. (3) (a) at each location specified
15in the notice.
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(b) If within 3 business days after service of a notice under par. (a) an employer
17does not demonstrate compliance with the requirements listed under sub. (3) (a) with
18respect to a location specified in the notice, the department may serve an order on
19the employer requiring the employer to stop work at the locations specified in the
20order. The order shall advise the employer that the employer may request a hearing
21on the order under sub. (6) (a), describe how the employer may request a hearing, and
22be accompanied by a form for requesting a hearing. The order shall take effect as
23provided in the order and shall remain in effect until the employer provides evidence
24satisfactory to the department that it is in compliance with the requirements under
25sub. (3) (a) and pays the forfeiture under par. (c).
SB672,9,5
1(c) An employer that does not stop work as required under an order under par.
2(b) may be required to forfeit $250 for each day beginning on the day on which the
3order is served and ending on the day on which the employer provides evidence
4satisfactory to the department that it has stopped work as required under the order
5or is in compliance with sub. (3) (a), whichever occurs first.
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(d) An order under this subsection is final unless appealed under sub. (6). An
7order under this subsection is subject to review only as provided in sub. (6) and not
8as provided in ch. 227.
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9(6) Appeal of stop work order and civil penalty. (a) Any employer that is
10aggrieved by an order to stop work under sub. (5) (b) may appeal the order by filing
11with the department a written request for a hearing to review the order within 10
12days after service of the order. If a request for a hearing is filed within those 10 days,
13the department shall hold the hearing within 14 days after receipt of the request.
14The order to stop work shall be automatically stayed from the filing of the request
15for a hearing until the date on which a decision on the appeal is issued under par. (b).
16Notwithstanding the stay of the order to stop work, the forfeiture under sub. (5) (c)
17shall continue to accrue as provided in sub. (5) (c).
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(b) 1. The hearing shall be held before an appeal tribunal and shall be
19conducted in the manner described in s. 108.09 (5). Within 7 days after the hearing,
20the appeal tribunal shall issue a decision in writing affirming, reversing, or
21modifying the order to stop work and forfeiture.
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2. If the appeal tribunal finds that the employer has at all times been in
23compliance with the requirements specified in sub. (3) (a), the appeal tribunal shall
24reverse the order to stop work and forfeiture.
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13. If the appeal tribunal finds that the employer has not complied with the
2requirements specified in sub. (3) (a), the automatic stay under par. (a) shall be lifted
3and the order to stop work shall remain in effect until the employer provides evidence
4satisfactory to the department that the employer is in compliance with the
5requirements specified in sub. (3) (a) and pays the forfeiture under sub. (5) (c).
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4. A decision of an appeal tribunal under this paragraph is final unless a review
7of the decision is requested under par. (c). A decision of an appeal tribunal under this
8paragraph is subject to review only as provided in par. (c) and not as provided in ch.
9227.
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(c) The employer or the department may request a review of an appeal
11tribunal's decision by petitioning the commission for review of the decision within 21
12days after the decision was mailed to the employer's last-known address. The
13commission shall conduct the review in the manner described in s. 108.09 (6). An
14order to stop work that is in effect under par. (b) 3. shall remain in effect as provided
15in par. (b) 3. during the pendency of a review under this paragraph. A decision of the
16commission under this paragraph is final and the provisions of s. 108.10 (6) and (7)
17shall apply to the decision unless judicial review of the decision is requested under
18par. (d). A decision of the commission under this paragraph is subject to judicial
19review only as provided in par. (d) and not as provided in ch. 227.
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(d) The employer or the department may commence an action for the judicial
21review of a decision of the commission under par. (c) within 30 days after the decision
22was mailed to the employer's last-known address. The scope of judicial review under
23this paragraph, and the manner of that review insofar as is applicable, shall be the
24same as that provided in s. 108.09 (7). An order to stop work that is in effect under
1par. (b) 3. shall remain in effect as provided in par. (b) 3. during the pendency of a
2review under this paragraph.
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(e) In addition to any forfeiture for which the employer may be liable under sub.
4(5) (c) and any other penalty for which the employer may be liable for a violation of
5a requirement specified in sub. (3) (a), any employer that violates a final order to stop
6work of the department under sub. (5) (b) or final decision of an appeal tribunal, the
7commission, or a court affirming such an order under par. (b), (c), or (d) is subject to
8a forfeiture of $1,000 for each day of violation. An employer may seek review of a
9forfeiture imposed under this paragraph in the same manner as an order to stop work
10is reviewed under pars. (a) to (d).
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11(7) Other enforcement action not precluded. An investigation, order, or
12decision under sub. (4), (5), or (6) does not preclude or otherwise impair or affect any
13other action that is required or permitted to enforce a requirement under this
14chapter or under ch. 101, 102, 104, 108, 109, or 111, including any investigation,
15order, or decision; any civil or criminal action or administrative proceeding; or any
16obligation for any payment, reimbursement, assessment, surcharge, forfeiture, or
17other remedy or penalty under any of those chapters.
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18(8) Recovery of unpaid forfeitures. (a) If an employer fails to pay a forfeiture
19imposed under sub. (5) (c) or (6) (e), the department has a perfected lien upon the
20employer's right, title, and interest in all of its real and personal property located in
21this state in the amount finally determined to be owed, plus costs. Except when
22creation of a lien is barred or stayed by bankruptcy or other insolvency law, the lien
23is effective when the stop work order or decision affirming the stop work order
24becomes final and shall continue until the amount owed, plus costs and interest to
25the date of payment, is paid. The employer shall pay interest on the amount owed
1at the rate of 1 percent per month or fraction of a month from the date on which the
2amount became due. If a lien is initially barred or stayed by bankruptcy or other
3insolvency law, the lien shall become effective immediately upon expiration or
4removal of the bar or stay. The perfected lien does not give the department priority
5over any lienholders, mortgagees, purchasers for value, judgment creditors, or
6pledges whose interests have been recorded before the lien of the department is
7recorded.
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(b) 1. If an employer fails to pay to the department any amount found to be due
9the department in proceedings under this section and if no proceeding for review is
10pending and the time for taking an appeal or review has expired, the department or
11any authorized representative of the department may issue a warrant directed to the
12clerk of circuit court for any county of the state. The clerk of circuit court shall enter
13in the judgment and lien docket the name of the employer mentioned in the warrant
14and the amount of the forfeiture, interest, costs, and other fees for which the warrant
15is issued and the date when the warrant is entered. A warrant so entered shall be
16considered in all respects to be a final judgment constituting a perfected lien upon
17the employer's right, title, and interest in all real and personal property located in
18the county where the warrant is entered. The lien is effective when the department
19issues the warrant and shall continue until the amount owed, including interest,
20costs, and other fees to the date of payment, is paid. After a warrant is entered in
21the judgment and lien docket, the department or any authorized representative of
22the department may file an execution with the clerk of circuit court for filing by the
23clerk of circuit court with the sheriff of any county where real or personal property
24of the employer is found, commanding the sheriff to levy upon and sell sufficient real
25and personal property of the employer to pay the amount stated in the warrant in
1the same manner as upon an execution against property issued upon the judgment
2of a court of record, and to return the warrant of the department and pay to the
3department the money collected by virtue of the execution within 60 days after
4receipt of the warrant.
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2. The clerk of circuit court shall accept, file, and enter each warrant,
6satisfaction, release, or withdrawal under this subsection in the judgment and lien
7docket without prepayment of any fee, but the clerk of circuit court shall submit a
8statement of the proper fee semiannually to the department covering the period from
9January 1 to June 30 and July 1 to December 31 unless a different billing period is
10agreed to between the clerk of circuit court and the department. The fees shall then
11be paid by the department, but the fees provided by s. 814.61 (5) for entering the
12warrants shall be added to the amount of the warrant and collected from the
13employer when satisfaction or release is presented for entry.
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(c) When the penalties set forth in a warrant together with interest and other
15fees to the date of payment and all costs due the department have been paid to the
16department, the department shall issue a satisfaction of the warrant and file that
17satisfaction with the clerk of circuit court. The clerk of circuit court shall
18immediately enter a satisfaction of the judgment on the judgment and lien docket.
19The department shall send a copy of the satisfaction to the employer.