Wisconsin Building Trade Council Supports the “Fight the Fraud” Campaign

Fraudulent business practices cost Wisconsin over $200 million in lost tax revenue each year

Madison, Wisconsin (May 12, 2021) – The Wisconsin Building Trades Council (WBTC) commends Construction Business Group (CBG) for speaking out against fraudulent and unfair practices by fly-by-night contractors in the construction industry to the tune of more than $200 million in lost tax revenue to the State.

CBG’s “#Fight the Fraud” campaign focuses on the estimated 15,000 workers who are misclassified by their construction companies each year in Wisconsin, with significant detrimental impacts on those workers and a major state-wide financial impact on tax revenues.

By misclassifying workers, businesses evade their income, payroll, and unemployment tax obligations. Tax fraud alone makes up nearly $200 million that should be paid to the State of Wisconsin each year but is instead unjustly kept by those not paying their fair share.

Misclassified employees often are denied access to critical benefits and protections they are entitled to by law, such as wages, overtime compensation, family and medical leave, unemployment insurance, and safe workplaces. Employee misclassification generates substantial losses to Wisconsin’s taxpayers in the form of lower tax revenues, as well as to state unemployment insurance and workers’ compensation funds.

“These are staggering figures,” says Jake Castanza, WBTC Executive Director. “In Wisconsin, nearly 15,000 or ten percent of the workforce are exploited in Wisconsin, according to the Midwest Economic Policy Institute. Illegally employed workers paid off the books earn about 31 percent in combined wages and fringe benefits. Our State annually loses $40 million in state tax revenues due to construction payroll fraud– including $8 million in income taxes, $6 million in unemployment insurance contributions, and $26 million in workers’ compensation premiums.”

Robb Kahl, Executive Director of CBG, said: “Everyone in Wisconsin is affected, as these fraudulent business practices cost the State of Wisconsin over $200 million in lost tax revenue each year. It’s time that we start holding companies who misclassify their workers accountable and make them pay their fair share in our State.”

According to Wisconsin’s 2021 Misclassification Task Force Annual Report, the $200 million consists of $91.2 million in unpaid personal income tax; $50.7 million in unpaid business tax; $56 million of unpaid unemployment insurance tax; and $2.6 million for injured employees working for illegally uninsured employers. Insurance Fraud: If the company does not correctly classify a worker as a full-time employee, the company likely is not properly reporting that worker for insurance purposes. Doing so is called insurance premium fraud, which is illegal. Premium fraud in the construction industry alone costs the insurance industry $26 million annually in lost workers’ compensation premiums.

“The 17 Trade Unions and the 40,000 hard-working men and women we represent fully and strongly support the #FightTheFraud campaign and the work CBG and other industry affiliates are doing on this very serious issue,” Castanza said. “Wisconsin can no longer afford to turn a blind eye to the issue of worker misclassification.”

About WBTC

The Wisconsin Building Trades Council was founded in 2018 to carry on its member unions’ proud traditions, many of which have been working for workers’ rights for over 130 years. Today, the WBTC supports and furthers 17 different unions’ efforts in the building trades with 63 locals and over 40,000 members overall. All are working together to:

  • Pursue the highest level of performance and technical knowledge in their industries
  • Maintain a position as the preferred choice for commercial construction in the State
  • Create a steady stream of work for union member
  • Fight for The Prevailing Wage for union members
  • Ensure on-site compliance with safety and health regulations
  • Foster a workforce diverse in ethnicity and gender
  • Be transparent and accountable in all business relationships
  • Provide apprenticeship and professional growth opportunities for workers
  • Take a leading role in philanthropic and volunteer activities within the community
  • Take a proactive role in supporting pro-worker legislation for building trades unions.

Member Unions

  • Bricklayers and Allied Craftworkers District Council of Wisconsin
  • International Association of Heat and Frost Insulators and Allied Workers
  • International Association of Sheet Metal, Air, Rail, and Transportation Workers Local 18 And Local 10
  • International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers And Helpers Union 107
  • International Brotherhood of Electrical Workers
  • International Brotherhood of Teamsters Local 200
  • International Union of Elevator Constructors
  • International Union of Operating Engineers Local 139
  • International Union of Painters and Allied Trades District Council 7 & DC 82
  • Ironworkers District Council of North Central States
  • North Central States Regional Council of Carpenters
  • Operative Plasterers’ and Cement Masons’ Local 599
  • The Wisconsin Laborers’ District Council
  • The Wisconsin Pipe Trades Association
  • United Union of Roofers, Waterproofers, & Allied Workers

 

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