Governor Steve Bullock today issued an executive order creating the Task Force on Integrity in Wage Reporting and Employee Classification to help reduce and eliminate unlawful misclassification and payroll fraud and ensure Montanans receive fair pay.
“Fairness is a Montana value, and today we’re upholding that,” Governor Bullock said. “This order will ensure vulnerable workers receive the pay they’ve earned, combat fraud, and make sure the folks already following the rules have the tools they need to keep doing so.”
The Task Force is made up of representatives from organized labor, construction contractors, the Montana Department of Labor & Industry, and the Montana Department of Revenue. The Task Force will be chaired by Lt. Governor Mike Cooney. Task force members will identify illegal wage practices and tax fraud in the construction industry. Members will report quarterly on action to the Governor and make recommendations to strengthen compliance activities.
Payroll fraud occurs when employees don’t receive legally promised wages including overtime, not paying the minimum wage or not paying for all hours worked. It can also include paying workers under-the-table or misclassifying employees as independent contractors. Businesses that inadvertently or purposefully underpay workers go without paying their fair share of taxes. This fraud deprives workers of earned wages and burdens ratepayers in the workers’ compensation and unemployment systems by creating uninsured and underinsured claims.
“Construction is one of Montana’s fastest growing industries and provides good-paying jobs that benefit all Montanans,” Mario Martinez from the Pacific Northwest Regional Council of Carpenters said. “I’m thankful for the Governor’s leadership in addressing the wage theft and payroll fraud that deprives workers who play by the rules of their lawful protections.”
“Misclassification puts firms and workers at a competitive disadvantage by allowing bidders to undercut contract pricing that reflects true payroll costs,” David Smith, executive director of the Montana Contractor’s Association, said. “We are thrilled to see a task force that will address this issue head-on and ensure lawful businesses remain competitive.”
The construction sector is vital to Montana’s economic growth and stability. It is one of the largest in Montana. In 2018, there were 28,600 payroll workers working for 6,400 employing businesses, each earning an average annual salary of $52,000. An additional 11,500 individuals registered with the Montana Department of Labor & Industry as independent contractors within the construction industry. Total 2018 payroll wages in this industry were approximately $1.5 billion, with Gross Domestic Product of approximately $2.9 billion. Employment growth in Montana’s construction industry is currently about 3 percent, faster than the economy as a whole. A healthy construction sector is critical to continued economic growth, as the industry creates the infrastructure and housing needed by Montana’s workers and businesses.
Members of the Task Force on Integrity in Wage Reporting and Employee Classification:
- Mike Cooney, Lieutenant Governor
- Galen Hollenbaugh, Commissioner, Montana Department of Labor & Industry
- Gene Walborn, Director, Montana Department of Revenue
- Mario Martinez, Pacific Northwest Regional Council of Carpenters
- Kim Rickard, Laborers’ International Union of North America
- Jack McBroom, International Brotherhood of Electrical Workers
- Debora Poteet, Poteet Construction
- Doug Jackson, Jackson Contractor Group
- Bob Warren, Schellinger Construction