The Building Tradesman Newspaper

Friday, April 14, 2000

1099 abuse, MIOSHA inspectors on agenda for House Democrats

By The Building Tradesman

By State Representative Julie Dennis

As you may know, the budgets for the various state departments are starting to work their way through the Michigan Legislature. As the ranking Democrat on the House Employment Relations, Training and Safety Committee, I thought I would take this opportunity to bring you up to speed on some of the labor-related issues we have dealt with in the budgets so far.

1099 Abuse
House Democrats twice attempted to bring the issue of 1099 abuse to the forefront - once in the general government budget and once in the package of legislation that attempts to regulate the adult entertainment business.

Our aim with these amendments was to draw attention to the problems that workers, especially in the construction trades, face when a company misclassifies an employee as a sub-contractor. In this situation, that worker suddenly finds himself in the position of being responsible for his own taxes, since the employer is no longer paying taxes to the state or to the Michigan Unemployment Compensation system.

We have proof in several cases where the workers are either given cash in an envelope or a flat check and treated as a sub-contractor, and at year end are issued a 1099.

Incidents of 1099 abuse also affect our state's revenue. Michigan and the federal government lose millions in tax revenue each year due to 1099 abuse. In addition, this precludes employees from receiving any unemployment compensation benefits, workers compensation benefits, health insurance or retirement benefits.

One of the amendments we attempted would have provided a legal remedy for workers who are faced with the situation of their employer not paying the taxes due to the state or federal government. Under the amendment, the employer would not be able to make construction workers independent contractors. Employers who violated the rule would be subject to a legal judgment that could award the worker back wages, benefits and actual attorney fees.

This amendment failed on a procedural vote, with several vulnerable Republican legislators helping to defeat it. They include Reps. Clark Bisbee (R-Jackson), Sandy Caul (R-Mount Pleasant), Jennifer Faunce (R-Warren), Judd Gilbert (R-Algonac), Lauren Hager (R-Port Huron), Jim Howell (R-St. Charles), Larry Julian (R-Lennon), Randy Richardville (R-Monroe), Scott Shackleton (R-Sault Ste. Marie), Gerald VanWoerkom (R-Muskegon), and Gary Woronchak (R-Dearborn).

The second amendment House Democrats sponsored would have allowed the Department of Treasury to go after these contractors who do not operate above-board with their workers. The amendment would have added two full-time positions to the department to study construction industry 1099 abuse. The amendment was voted down by the Republican majority, with many of the same vulnerable legislators voting against it.

It is obvious that Republicans are not concerned with protecting Michigan's workers from the rampant practice of 1099 abuse, and are more concerned with protecting the contractors. It is unfortunate that this misguided loyalty is costing our state millions in tax revenues.

I am very concerned about 1099 abuse in our state. I will be drafting legislation based on both of these amendments to introduce later in the year. I would welcome any input from you or your membership on how to best attack this problem.

More MIOSHA Inspectors
House Democrats are claiming a victory in the Department of Consumer and Industry Services budget after successfully adding 15 new Michigan Occupational Safety and Health Administration inspectors.

A Democratic-sponsored amendment attracted the votes of eight Republican legislators to add the inspectors. The funding will provide for five general industry safety inspectors, five construction industry safety inspectors, and five industrial hygienists.

I was pleased to see this amendment pass, and I will continue working with my colleagues in the Michigan Senate to see that the funding survives in that chamber.

As the rest of the 2000-2001 state budget works its way through the Legislature, I will keep you updated on any labor-related issues we debate. Please feel free to contact my office if you have any questions or concerns about the budget.