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AG Launches Payroll Fraud Unit to Stem Misclassification

Wednesday, April 24, 2019 | 325 | 0 | 37 min read

Michigan's attorney general launched a new enforcement unit to prosecute worker misclassification and wage theft by employers.

Attorney General Dana Nessel

Attorney General Dana Nessel

Attorney General Dana Nessel, a Democrat, was elected last fall on a promise to protect workers, and the payroll fraud unit is one of several actions she has taken, according to news reports.

“These are companies that fraudulently report employees as self-employed and independent contractors, or they’re paying workers under the table,” Nessel said during a news conference in Lansing.

“They refuse to pay overtime, benefits, health insurance and workers’ compensation. And because they cheat on time cards to keep costs off the books, they’re not paying their taxes,” Nessel said. “The majority of Michigan companies play by the rules, but those who don’t are cheating the system, raking in unfair profits and hurting Michigan in the process.”

The payroll fraud unit will be led by Zachary Risk, an assistant state attorney general, and housed within the office’s labor division, Nessel said. It will coordinate with other state agencies, including the Department of Licensing and Regulatory Affairs’ Wage and Hour Division, to investigate complaints against companies.

Contractors and labor groups across the country have complained bitterly about the amount of misclassification and premium fraud in the construction business, but few states have created fraud units to concentrate on it.

Democratic state officials were at the news conference Monday, but business groups and Republican lawmakers were not and said they were not contacted about it. Nessel said fraud investigation should not be a partisan issue.

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