In May, Governor Jim Doyle signed Senate Bill 672 and Assembly Bill 929 which both address misclassification of employees. Although neither law is binding on employers in other states, employers should expect to see similar laws and initiatives in their respective states as both federal and state agencies ramp up their enforcement on worker misclassification.

Senate Bill 672 requires the Wisconsin Department of Workforce Development to educate employers and employees about the proper classification of workers, as well as receive and investigate complaints alleging the misclassification of employees. Similar to the U.S. Department of Labor’s new initiative to coordinate with other agencies to curb worker misclassification, Senate Bill 672 expressly requires the Department to cooperate with other state and local agencies in any investigations regarding the misclassification of employees.

Senate Bill 672 further provides that the Department may require an employer to provide proof that it is maintaining records of all persons working for the employer, workers’ compensation coverage for its employees, and records of the hours worked by, wages paid to and any deductions made from wages to employees. If the Department finds that an employer has misclassified an employee, the Department may order the employer to stop work and pay a forfeiture. Senate Bill 672 becomes effective January 1, 2011.

Assembly Bill 929 amends a current law by adding persons engaged in the painting or drywall finishing of buildings or other structures to the other trades in the construction industry defined as employers under the law. The current law provides for penalties for willful misclassification of employees with the intent to evade any requirement of laws relating to income tax withholding, worker’s compensation, unemployment insurance, or employment discrimination and a fine of $25, 000.00 for each violation.