LANSING – Legislation designed to help prevent predatory companies from committing payroll fraud - which robbed 2.8 million Michigan workers of more than $49 million in wages and overtime between 2013 - has been introduced in both the state Senate and House of Representatives. 

“There is no doubt that predatory companies stealing workers’ wages is contributing to the fact that 43 percent of Michigan’s working families can’t afford to meet their basic needs every month,” said Michigan AFL-CIO President Ron Bieber. “These crimes against working people have been going on for too long without any consequence for the companies committing them. This is an important step to stop their bad behavior, so Michigan families get the wages and benefits they earned."

In addition to the impact on individual workers, payroll fraud costs Michigan taxpayers $107 million a year in tax revenue.

House Bill 4875 would allow an individual or the Attorney General to sue a person who pursues a fraudulent monetary claim against the government. Introduced by Rep. John Cherry (D-Flint), the legislation would crack down on companies committing payroll fraud, increasing penalties for bad actors while strengthening oversight to protect businesses playing by the rules.

"One of the biggest objections offered when someone tries to reform a broken system is that the solution doesn’t do enough to address the potential for fraud," Cherry said. "My legislation deals with it head on: if a person or business tries to game the system and files false claims, either the injured party or the attorney general will be able to sue them. Our comprehensive package tackles every aspect of payroll fraud — including provisions like mine to help protect responsible businesses or employers to ensure the only people being penalized are the ones breaking the law.”

House Bill 4876 aims to expand the “Whistleblower Protection Act” to cover government employees who to date, have little protection against on-the-job retaliation for exposing fraud.

The bill's sponsor, state Rep. Joe Tate (D-Detroit), said "one of the hallmarks of a strong society is a willingness to stand up for what is right and speak the truth, and we need to reward, not punish people for having the courage to do that. This type of injustice, like so many others, festers in the darkness, and if we want to stop it, we need people who are willing to shine a light on it. We have a responsibility to protect whistleblowers from retaliation if we want make those high ideals a reality.”

The legislation builds on an effort announced in July by Michigan Attorney General Dana Nessel, who said she is gearing up for potential criminal and civil charges as part of her office’s efforts combat  payroll fraud in the state. Since launching her Payroll Fraud Enforcement Unit in April, Nessel’s office has received nearly 100 complaints of payroll fraud through its tip line and website.