What can be done about bad employers who avoid paying required workers’ compensation benefits?

Steps must be taken to stop uninsured employers from avoiding responsibilities under workers’ compensation and how we can reward businesses who play by the rules.

Workers' Compensation Form

The Detroit News is reporting on a new executive directive from Governor Gretchen Whitmer that would prioritize state contracts based upon whether individual companies “are good stewards of the state.” The “Michigan Jobs First” directive would add factors such as labor and environmental histories, pay, benefits and placement in economically-disadvantaged zones. The stated goal is to grow businesses and create jobs right here in Michigan. The State of Michigan signed 8,813 contracts totaling about $2.14 billion last year.

This news comes on the heels of Attorney General Dana Nessel announcing a new unit that will investigate payroll fraud. She is trying to stop businesses who misclassify employees to avoid paying overtime, health benefits, or workers’ compensation. We have blogged about this problem on several different occasions.

We are thrilled to see Governor Gretchen Whitmer and Attorney General Dana Nessel take a proactive approach on these issues. Michigan businesses who play by the rules should be rewarded with lucrative state contracts. Here is our take on employee misclassification and other areas where more needs to be done.

Employee misclassification

Employee misclassification happens when a business intentionally calls its employees “independent contractors” regardless of their employment status. They are paid wages with a 1099 tax form and no income withholding occurs. Independent contractors are not covered under workers’ compensation and they are on their own if an accident happens. Medicaid and other state resources end up being used instead. Employee misclassification also puts other businesses at a financial disincentive, and it needs to be stopped.

Uninsured employers

Michigan law requires that employers purchase workers’ compensation insurance. It covers lost wages and medical care for employees hurt on-the-job. It is a safety net the helps employees after a workplace accident. We see many bad employers fail to purchase required workers’ compensation insurance just to save a few bucks. Penalties for this behavior include civil fines and even criminal charges. Unfortunately, these penalties are rarely sought, and employers get away with breaking the rules. We hope the attorney general takes a more aggressive approach on this issue and sends a message that this behavior will not be tolerated.

Refusing to accept claims

We get constant telephone calls from employees hurt on-the-job who cannot get their employers to make a workers’ compensation claim. They are given the run-around when asking about their benefits. Employers discourage claims to save money and keep insurance premiums low. Promises to cover medical care and lost wages under the table are rarely kept. The good news is that employees hurt at work can file their own claims with the State of Michigan. It is important to speak with an experienced workers’ compensation lawyer should this need to be done.

Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (844) 316-8033 for a free consultation today.

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Employee misclassification is a big problem that must be fixed!

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