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New Bills Would Update Michigan Payroll Fraud Law

A picture of a bull dozer standing in a dirt pit.
The aim of the new bills is to make it harder for companies (like construction companies) to take advantage of their workers.

Attorney General Dana Nessel has created a task force whose sole purpose is to crack down on payroll fraud. The AG’s Payroll Fraud Enforcement Initiative aims to address what she believes is an under-the-radar problem that steals millions in taxes from the government every year, and cheats hardworking Michiganians out of their wages. 

But part of the problem, according to the task force, is the fact that Michigan’s laws just aren’t harsh enough when it comes to punishing these practices. So a group of legislators from the Michigan House of Representatives has come together to create a package of 12 bills that will address these issues, both at a civil and a criminal level.

So what crimes exactly is the task force trying to address?

There are a number of aspects in play here, and the bill package aims to address all of them in one fell swoop. These include:

  • Targeting employers that fail to pay wages properly
  • Targeting employers that don’t pay overtime wages
  • Establishing enhanced protections and penalties under Michigan’s whistleblower statute
  • Addressing overzealous enforcement of noncompete agreements 
  • Targeting employers who misclassify employees as independent contractors.
  • Allowing the state, local governments, and workers to sue those who are shielded from individual liability

Employees who are found guilty of first time offenses in any other these categories can be charged with a misdemeanor crime. If they’re caught a second time, or any more times after that, they canl be facing felony charges. However, remember that we’re only talking about state of Michigan charges. We are not addressing possible federal charges or civil actions. Many of the issues before this task force are already covered by federal law and the Internal Revenue Code. 

What does the current law say about this issue?

Under current Michigan law, any employer who doesn’t pay the correct amounts of wages and fringe benefits (like overtime pay) to an employee is guilty of a misdemeanor punishable by a $1,000 fine. If the new bills get passed, that penalty will be increased to include punishment of up to a year in jail for a first offense. Second and subsequent offenses would be felonies punishable by up to two years in prison, and a $10,000 fine.

Being accused of a crime that pertains to your job or your business can do a lot more damage than just make a dent in your wallet. Criminal charges can ruin your reputation and cost you valuable client relationships. So if you’ve been accused of intending to defraud your employees, the government or the IRS, call our experienced defensel team at The Kronzek Firm at 866 766 5245. We’re here to help 24 / 7.

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