March 17, 2010, Introduced by Rep. Kandrevas and referred to the Committee on Labor.
A bill to amend 1969 PA 317, entitled
"Worker's disability compensation act of 1969,"
by amending section 171 (MCL 418.171), as amended by 1985 PA 103,
and by adding section 172.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 171. (1) If any employer subject to the provisions of
this act, in this section referred to as the principal, contracts
with any other person, in this section referred to as the
contractor, who is not subject to this act or who has not complied
with the provisions of section 611, and who does not become subject
to this act or comply with the provisions of section 611 prior to
the date of the injury or death for which claim is made for the
execution by or under the contractor of the whole or any part of
any work undertaken by the principal, the principal shall be liable
to pay to any person employed in the execution of the work any
compensation under this act which he or she would have been liable
to pay if that person had been immediately employed by the
principal. If compensation is claimed from or proceedings are taken
against
the principal, then , in the application of this act,
reference to the principal shall be substituted for reference to
the employer, except that the amount of compensation shall be
calculated with reference to the earnings of the person under the
employer by whom he or she is immediately employed. A contractor
shall
be deemed is considered to include subcontractors in all
cases where the principal gives permission that the work or any
part thereof be performed under subcontract.
(2) If the principal is liable to pay compensation under this
section,
he or she shall be entitled to be indemnified by the
contractor
or subcontractor. The employee shall is not be entitled
to recover at common law against the contractor for any damages
arising
from such that injury if he or she takes compensation from
such
that principal. The principal, in case he or she pays
compensation
to the employee of such the
contractor, may recover
the
amount so paid in an action against such that contractor.
(3)
This section shall apply applies
to a principal and
contractor only if the contractor engages persons to work other
than persons who would not be considered employees under section
161(1)(d).
(4) Principals willfully acting to circumvent the provisions
of this section or section 611 by using coercion, intimidation,
deceit, or other means to encourage persons who would otherwise be
considered employees within the meaning of this act to pose as
contractors for the purpose of evading this section or the
requirements
of section 611 shall be are
liable subject to the
provisions
of section 641. Nothing in this This
section shall not
be construed to prohibit an employee from becoming a contractor
subject to the provisions of section 151. A principal may demand
that the contractor enter into a written agreement with the
principal agreeing to reimburse the principal for any loss incurred
under this section due to a claim filed pursuant to this act for
compensation and other benefits.
(5) In the case of principals and contractors in the
commercial carrier and construction industries, a contractor is
considered to be classified an employee of the principal, and shall
be treated as an employee under this act, unless the principal
demonstrates the following to the satisfaction of the director:
(a) The contractor, encompassing all provisions of section
161(1)(n), is not an employee.
(b) The contractor has been and will continue to be free from
direction and control of the principal, both in fact and pursuant
to the contract, express or implied, between the parties.
(6) Notwithstanding any other provision of this act, a
principal that fails to properly classify an individual as an
employee and that fails to pay benefits or other contributions
required by this act and under law is guilty of the following:
(a) For knowingly violating this subsection, a felony
punishable by imprisonment for not more than 18 months or a fine of
not more than $15,000.00, or both, for a first offense, and
imprisonment for not more than 7 years or a fine of not more that
$30,000.00, or both, for a second or subsequent offense.
(b) For unintentionally violating this subsection, a
misdemeanor punishable by imprisonment for not more than 6 months
or a fine of not more than $2,500.00, or both, for a first offense,
and imprisonment for not more than 1 year or a fine of not more
that $5,000.00, or both, for a second or subsequent offense.
(7) If the director determines that a violation of subsection
(5) has occurred, the director may issue a stop-work order
requiring the cessation of all business operations within 72 hours
of the determination. The stop-work order takes effect when served
upon the employer or, for a particular employer worksite, when
served at the worksite. The stop-work order remains in effect until
the director issues an order releasing the stop-work order or upon
finding that the employer has properly classified the individual as
an employee. The director may impose a probationary period not to
exceed 2 years in duration and shall require the employer to file
with the department periodic reports demonstrating the employer's
continued compliance with requirements of this section. The
department shall promulgate rules under the administrative
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, to
determine filing times and report requirements. A stop-work order
and penalty issued under this subsection are effective against any
successor corporation or business entity that has 1 or more of the
same principals or officers as the employer against whom the stop-
work order was issued and that is engaged in the same or equivalent
trade or activity. The director shall assess an administrative
penalty of $1,000.00 per day against an employer for each day that
the employer conducts business operations that are in violation of
a stop-work order issued under this subsection.
(8) A contractor improperly classified as a contractor, or an
organization or union representing the employee, may bring a civil
action, including a class action, in a court of competent
jurisdiction to enforce the classification. An individual's
representative, including a labor organization, has standing to
bring the action on behalf of the individual or on behalf of a
class of individuals. Upon prevailing in an action brought under
this subsection, the court may award attorney fees and other costs
of the action in addition to damages to an individual or class of
individuals who have not been properly classified as employees in
violation of this section.
(9) The remedies under this section are cumulative and do not
prohibit the bringing of any administrative, civil, or criminal
action under this act or as provided by law if not otherwise
prohibited by law. The director may promulgate rules under the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328, to enforce this section.
Sec. 172. (1) If the director receives information indicating
that an employer, or officer or agent of the employer, has
knowingly and intentionally violated this act, or has been
convicted of a violation of this act, the director shall issue an
order to show cause why the individual should not be found in
violation of this act and subject to debarment. An individual
served with an order to show cause shall have a period of 14 days
from the date the order is served to file an answer in writing. If
the individual fails to file a timely and adequate answer to the
order to show cause, the director shall issue an immediate
debarment order or immediately assess administrative penalties as
provided in this section, or both. The director shall notify all
public bodies in this state of the name of the employer, and no
contract shall be awarded to the employer or to any firm,
corporation, or partnership in which the employer has an interest
until a period of up to 3 years, as determined by the director,
after the date of issuance of the notice of the debarment order.
(2) As an alternative to or in addition to any other sanctions
provided by law for a violation of this act, when the director
finds that an employer has violated this act, the director is
authorized to assess and collect administrative penalties up to a
maximum of $2,500.00 for the first violation and up to a maximum of
$5,000.00 for each subsequent violation. When determining the
amount of the administrative penalty imposed due to a violation,
the director shall consider factors that include the history of
previous violations by the employer, the seriousness of the
violation, the good faith of the employer, and the size of the
employer's business.
(3) The department may subpoena witnesses, administer oaths,
examine witnesses, take testimony, and compel the production of
documents. Upon application of an attorney representing the state,
the department may issue a subpoena to compel the production of the
documents, computer records, and information relating to compliance
with this act. The director may seek enforcement in the circuit
court of any order or subpoena issued by the department.
(4) An employer or any other party shall not discriminate in
any manner, or take adverse action against, a person in retaliation
for exercising rights protected under this act. Rights protected
under this act include, but are not limited to, the right to file a
complaint or inform any person about an employer's noncompliance
with this act and the right to inform any person of the person's
potential rights and to assist the person in asserting those
rights.
(5) A person who, in good faith, alleges noncompliance with
this act is afforded the rights provided by this act,
notwithstanding the person's failure to prevail on the merits.
Taking adverse action against a person within 90 days after the
person's exercise of rights creates a rebuttable presumption of
having done so in retaliation for the exercise of those rights. A
person alleging a violation of this subsection may bring an action
in a court of competent jurisdiction to seek compensation for
economic and noneconomic losses, including the assessment of
punitive damages.
(6) Any assessments and administrative penalties collected
under this act shall be placed in the worker's compensation
administrative revolving fund created in section 835a and applied
in the manner provided for in section 835(5).