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Current law requires DWD to assess an administrative penalty against an
employer engaged in construction projects or in the painting or drywall finishing of
buildings or other structures who knowingly and intentionally provides false
information to DWD for the purpose of misclassifying or attempting to misclassify
an individual who is an employee of the employer as a nonemployee under the UI law.
The penalty under current law is $500 for each employee who is misclassified, not
to exceed $7,500 per incident. Current law additionally requires DWD to assess an
administrative penalty against such an employer who, through coercion, requires an
individual to adopt the status of a nonemployee in the amount of $1,000 for each
individual so coerced, but not to exceed $10,000 per calendar year. Penalties are
deposited in the unemployment program integrity fund.

The bill removes the $7,500 and $10,000 limitations on these penalties and
provides that the penalties double for each act occurring after the date of the first
determination of a violation. The bill also removes the limitations on the types of
employers that the penalties apply to, allowing them to be assessed against any type
of employer that violates the above prohibitions.
Worker's compensation; penalties for uninsured employers
Under current law, DWD is required to assess an administrative penalty
against an employer who requires an employee to pay for any part of worker's
compensation insurance or who fails to provide mandatory worker's compensation
insurance coverage. If the employer violates those requirements, for the first 10
days, the penalty under current law is not less than $100 and not more than $1,000
for such a violation. If the employer violates those requirements for more than 10
days, the penalty under current law is not less than $10 and not more than $100 for
each day of such a violation.
The bill provides that the penalty for violations occurring after the second such
violation is $3,000 per violation, or three times the amount of the insurance premium
that would have been payable, whichever is greater. The bill also provides that the
penalty for violations occurring after the third such violation is $4,000 per violation,
or four times the amount of the insurance premium that would have been payable,
whichever is greater.
Also under current law, if an employer who is required to provide worker's
compensation insurance coverage provides false information about the coverage to
his or her employees or contractors who request information about the coverage, or
who fails to notify a person who contracts with the employer that the coverage has
been canceled in relation to the contract, DWD is required to assess a penalty of not
less than $100 and not more than $1,000 for each such violation.
The bill provides that the penalty for violations occurring after the third such
violation is $3,000 per violation, and $4,000 for violations occurring after the fourth
such violation.
Worker misclassification outreach
The bill requires the Department of Administration to direct state agencies,
constitutional offices, departments, independent agencies, and societies,
associations, and certain other agencies of state government for which
appropriations are made by law, to provide educational outreach regarding worker
misclassification to employers, workers, and organizations that serve vulnerable
populations.
Worker misclassification information
The bill requires the Department of Financial Institutions to provide
informational materials and resources on worker misclassification to each person
who files with DFI documents forming a business corporation, nonstock corporation,
limited liability company, limited liability partnership, or limited partnership.
False or fraudulent worker's compensation claims
Under current law, if an insurer or self-insured employer has evidence that a
worker's compensation claim is false or fraudulent, the insurer or self-insured

employer must generally report the claim to DWD. If, based on the investigation,
DWD has a reasonable basis to believe that criminal insurance fraud has occurred,
DWD must refer the matter to the district attorney for prosecution. Also under
current law, DWD may request assistance from the Department of Justice to
investigate false or fraudulent activity related to a worker's compensation claim. If,
based on that investigation, DWD has a reasonable basis to believe that theft,
forgery, fraud, or any other criminal violation has occurred, DWD must refer the
matter to the district attorney or DOJ for prosecution. The bill extends these
requirements to insurers who have evidence that an application for worker's
compensation insurance coverage is fraudulent or that an employer has committed
fraud by misclassifying employees to lower the employer's worker's compensation
insurance premiums.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB398-ASA1,1 1Section 1 . 16.40 (24) of the statutes is created to read:
AB398-ASA1,4,82 16.40 (24) Worker misclassification outreach. Direct all departments to
3provide targeted educational outreach regarding worker misclassification in
4English, Spanish, and other languages spoken by a significant number of individuals
5in this state, to employers, workers, and organizations that serve vulnerable
6populations, including individuals with limited English proficiency. The outreach
7shall emphasize the appropriate departments to contact and the rights of individuals
8to remain anonymous when reporting worker misclassification.
AB398-ASA1,2 9Section 2 . 101.147 of the statutes is created to read:
AB398-ASA1,4,13 10101.147 Construction contractor registration. (1) (a) Except as provided
11in par. (b), no person may hold himself or herself out or act as a construction
12contractor unless that person is registered as a construction contractor by the
13department.
AB398-ASA1,4,1514 (b) The registration requirement under par. (a) does not apply to any of the
15following:
AB398-ASA1,5,2
11. A person who engages in construction on property owned or leased by that
2person.
AB398-ASA1,5,33 2. A state agency or local governmental unit.
AB398-ASA1,5,54 3. A person who engages in construction in the course of his or her employment
5by a state agency or local governmental unit.
AB398-ASA1,5,7 6(2) An application for a registration under this section shall require the
7applicant to submit all of the following:
AB398-ASA1,5,98 (a) The applicant's name, contact information, and physical address for the
9business principal.
AB398-ASA1,5,1410 (b) If the applicant is a corporation, limited liability company, limited
11partnership, or limited liability partnership and is not organized under ch. 178, 179,
12180, 181, or 183, evidence that the applicant is registered, or has obtained a
13certificate of authority or registration, to transact business in this state under s.
14178.1003, 179.1002, 180.1503, 181.1503, or 183.0909, as applicable.
AB398-ASA1,5,1515 (c) Evidence of compliance with the requirements under ss. 108.17 to 108.205.
AB398-ASA1,5,1616 (d) Evidence of compliance with s. 102.28 (2).
AB398-ASA1,5,1917 (e) An acknowledgment of worker classification laws and penalties to ensure
18that construction contractors registered under this section are aware of their
19obligations.
AB398-ASA1,5,21 20(3) The department may directly assess a forfeiture by issuing an order against
21any person who violates this section.
AB398-ASA1,5,23 22(4) The department shall, with the advice of the department of workforce
23development, promulgate rules to administer and enforce this section.
AB398-ASA1,3 24Section 3 . 101.1472 of the statutes is repealed.
AB398-ASA1,4 25Section 4 . 101.19 (1g) (m) of the statutes is created to read:
AB398-ASA1,6,1
1101.19 (1g) (m) Registering construction contractors under s. 101.147.
AB398-ASA1,5 2Section 5 . 102.125 (1m) of the statutes is created to read:
AB398-ASA1,6,113 102.125 (1m) Application and premium fraud. If an insurer has evidence that
4an application for worker's compensation insurance coverage is fraudulent or that
5an employer has committed fraud by misclassifying employees to lower the
6employer's worker's compensation insurance premiums in violation of s. 943.395, the
7insurer shall report the claim to the department. The department may require an
8insurer to investigate an allegedly fraudulent application or alleged fraud by
9misclassification of employees and may provide the insurer with any records of the
10department relating to that alleged fraud. An insurer that investigates alleged fraud
11under this subsection shall report the results of that investigation to the department.
AB398-ASA1,6 12Section 6 . 102.125 (2) of the statutes is amended to read:
AB398-ASA1,6,1813 102.125 (2) Assistance by department of justice. The department of workforce
14development may request the department of justice to assist the department of
15workforce development in an investigation under sub. (1) or (1m) or in the
16investigation of any other suspected fraudulent activity on the part of an employer,
17employee, insurer, health care provider, or other person related to worker's
18compensation.
AB398-ASA1,7 19Section 7 . 102.125 (3) of the statutes is amended to read:
AB398-ASA1,6,2520 102.125 (3) Prosecution. If based on an investigation under sub. (1), (1m), or
21(2) the department has a reasonable basis to believe that a violation of s. 943.20,
22943.38, 943.39, 943.392, 943.395, 943.40, or any other criminal law has occurred, the
23department shall refer the results of the investigation to the department of justice
24or to the district attorney of the county in which the alleged violation occurred for
25prosecution.
AB398-ASA1,8
1Section 8. 102.85 (1) (a) of the statutes is amended to read:
AB398-ASA1,7,52 102.85 (1) (a) An For each act occurring before the date of the first
3determination of a violation of this subsection, an
employer who fails to comply with
4s. 102.16 (3) or 102.28 (2) for less than 11 days shall forfeit not less than $100 nor and
5not
more than $1,000.
AB398-ASA1,9 6Section 9 . 102.85 (1) (b) of the statutes is amended to read:
AB398-ASA1,7,117 102.85 (1) (b) An For each act occurring after the date of the first or second
8determination of a violation of this subsection, an
employer who fails to comply with
9s. 102.16 (3) or 102.28 (2) for more than 10 days shall forfeit not less than $10 nor and
10not
more than $100 for each day on which the employer fails to comply with s. 102.16
11(3) or 102.28 (2).
AB398-ASA1,10 12Section 10 . 102.85 (1) (c) of the statutes is created to read:
AB398-ASA1,7,1613 102.85 (1) (c) For each act occurring after the date of the 3rd determination of
14a violation of this subsection, the employer shall be assessed a penalty in the amount
15of $3,000 for each act, or 3 times the amount of the premium that would have been
16payable, whichever is greater.
AB398-ASA1,11 17Section 11 . 102.85 (1) (d) of the statutes is created to read:
AB398-ASA1,7,2118 102.85 (1) (d) For each act occurring after the date of the 4th determination of
19a violation of this subsection, the employer shall be assessed a penalty in the amount
20of $4,000 for each act, or 4 times the amount of the premium that would have been
21payable, whichever is greater.
AB398-ASA1,12 22Section 12 . 102.85 (2) (intro.) of the statutes is amended to read:
AB398-ASA1,8,223 102.85 (2) (intro.) An For each act occurring after the date of the first
24determination under this subsection, an
employer who is required to provide

1worker's compensation insurance coverage under this chapter shall forfeit not less
2than $100 nor and not more than $1,000 if the employer does any of the following:
AB398-ASA1,13 3Section 13 . 102.85 (2j) of the statutes is created to read:
AB398-ASA1,8,64 102.85 (2j) For each act occurring after the date of the 3rd determination under
5sub. (2), an employer who is required to provide worker's compensation insurance
6coverage under this chapter shall forfeit $3,000 per violation.
AB398-ASA1,14 7Section 14 . 102.85 (2k) of the statutes is created to read:
AB398-ASA1,8,108 102.85 (2k) For each act occurring after the date of the 4th determination
9under sub. (2), an employer who is required to provide worker's compensation
10insurance coverage under this chapter shall forfeit $4,000 per violation.
AB398-ASA1,15 11Section 15 . 103.005 (4m) of the statutes is created to read:
AB398-ASA1,8,1412 103.005 (4m) (a) The department shall design and make available to employers
13a notice regarding worker classification laws, requirements for employers and
14employees, and penalties for noncompliance.
AB398-ASA1,8,1815 (b) All employers shall post, in one or more conspicuous places where notices
16to employees are customarily posted, the notice designed by the department under
17par. (a). Any employer who violates this paragraph shall forfeit not more than $100
18for each offense.
AB398-ASA1,8,2219 (c) The department shall establish and maintain on the department's website
20information regarding worker classification laws, requirements for employers and
21employees, penalties for noncompliance, and contact information at each state
22agency that administers worker classification laws.
AB398-ASA1,16 23Section 16 . 108.221 (1) (a) of the statutes is renumbered 108.221 (1) (a) (intro.)
24and amended to read:
AB398-ASA1,9,6
1108.221 (1) (a) (intro.) Any employer described in s. 108.18 (2) (c) or engaged
2in the painting or drywall finishing of buildings or other structures
who knowingly
3and intentionally provides false information to the department for the purpose of
4misclassifying or attempting to misclassify an individual who is an employee of the
5employer as a nonemployee shall, for each incident, be assessed a penalty by the
6department as follows:
AB398-ASA1,9,9 71. For each act occurring before the date of the first determination of a violation
8of this subsection, the employer shall be assessed a penalty
in the amount of $500
9for each employee who is misclassified, but not to exceed $7,500 per incident.
AB398-ASA1,17 10Section 17 . 108.221 (1) (a) 2. of the statutes is created to read:
AB398-ASA1,9,1311 108.221 (1) (a) 2. For each act occurring after the date of the first determination
12of a violation of this subsection, the employer shall be assessed a penalty in the
13amount of $1,000 for each employee who is misclassified.
AB398-ASA1,18 14Section 18 . 108.221 (2) of the statutes is renumbered 108.221 (2) (intro.) and
15amended to read:
AB398-ASA1,9,1916 108.221 (2) (intro.) Any employer described in s. 108.18 (2) (c) or engaged in the
17painting or drywall finishing of buildings or other structures
who, through coercion,
18requires an individual to adopt the status of a nonemployee shall be assessed a
19penalty by the department as follows:
AB398-ASA1,9,22 20(a) For each act occurring before the date of the first determination of a
21violation of this subsection, the employer shall be assessed a penalty
in the amount
22of $1,000 for each individual so coerced, but not to exceed $10,000 per calendar year.
AB398-ASA1,19 23Section 19 . 108.221 (2) (b) of the statutes is created to read:
AB398-ASA1,10,3
1108.221 (2) (b) For each act occurring after the date of the first determination
2of a violation of this subsection, the employer shall be assessed a penalty in the
3amount of $2,000 for each individual so coerced.
AB398-ASA1,20 4Section 20 . 182.01 (8) of the statutes is created to read:
AB398-ASA1,10,75 182.01 (8) Information to be provided with business formation filings. The
6department shall provide informational materials and resources on worker
7misclassification to each person who files with the department any of the following:
AB398-ASA1,10,88 (a) Articles of incorporation under s. 180.0202 or 181.0202.
AB398-ASA1,10,99 (b) Articles of organization under s. 183.0201.
AB398-ASA1,10,1010 (c) A statement of qualification under s. 178.0901.
AB398-ASA1,10,1111 (d) A certificate of limited partnership under s. 179.0201.
AB398-ASA1,21 12Section 21 . 601.41 (13) of the statutes is created to read:
AB398-ASA1,10,1713 601.41 (13) Employee misclassification outreach and education. The
14commissioner shall, on at least an annual basis, conduct outreach and education to
15persons subject to regulation under chs. 600 to 655 on how to identify the
16misclassification of employees as independent contractors and how to report
17suspected misclassifications to the appropriate federal and state agencies.
AB398-ASA1,22 18Section 22 . 943.395 (1) (e) of the statutes is created to read:
AB398-ASA1,10,2119 943.395 (1) (e) Presents an application for worker's compensation insurance
20coverage that is false or fraudulent or that falsely or fraudulently misclassifies
21employees to lower worker's compensation insurance premiums.
AB398-ASA1,23 22Section 23 . Nonstatutory provisions.
AB398-ASA1,10,2423 (1) Investigation and enforcement of worker classification. The department
24of workforce development shall do all of the following before December 31, 2024:
AB398-ASA1,11,5
1(a) Require the unemployment insurance division, in coordination with the
2division of personnel management in the department of administration, to review all
3recruitment and onboarding programs to ensure that auditor positions are correctly
4classified and the compensation for auditors is comparable to that in the private
5labor market.
AB398-ASA1,11,86 (b) Review resources available to investigators and auditors and evaluate
7potential strategies and improvements that could be implemented, including at least
8all of the following:
AB398-ASA1,11,9 91. Cross-training all investigators and auditors working in the department.
AB398-ASA1,11,10 102. Adding bilingual staff.
AB398-ASA1,11,12 113. Information technology improvements for more efficient exchange of
12information.
AB398-ASA1,11,1713 (2) Reporting. By no later than January 31, 2025, the department of workforce
14development shall submit a report to the chief clerk of each house of the legislature
15for distribution to the standing committees of the legislature under s. 13.172 (3) with
16jurisdiction over workforce development. The report shall include the findings of the
17department under sub. (1) (a) and (b).
AB398-ASA1,24 18Section 24 . Fiscal changes.
AB398-ASA1,12,219 (1) Investigation and enforcement of worker classification. In the schedule
20under s. 20.005 (3) for the appropriation to the department of workforce development
21under s. 20.445 (1) (gc), the dollar amount for fiscal year 2023-24 is increased by
22$157,500 to increase the authorized FTE positions for the department by 3.0 PR
23positions for the purpose of investigating and enforcing worker classification laws
24and rules. In the schedule under s. 20.005 (3) for the appropriation to the department

1of workforce development under s. 20.445 (1) (gc), the dollar amount for fiscal year
22024-25 is increased by $210,000 for the positions authorized under this subsection.
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