Senate Bill No. 477 Adds Felony Provisions For Employer Payroll Fraud

Currently, the Michigan Senate is reviewing Senate Bill No. 477.  This bill strengthens the penalties for employers who engage in payroll fraud. 

The current statute, Michigan Employment Law 1978, Act 390 (the “Act”), states at Sec. 15, “An employer who, with intent to defraud, fails to make payment of the wages and fringe benefits due an employee as provided in this act, is guilty of a misdemeanor, punishable by a fine of not more than $1,000.00, or imprisonment for not more than 1 year, or both.” 

Senate Bill No. 477 states, “An employer who, with the intent to defraud, fails to pay the wages and fringe benefits due an employee as provided in this act is guilty of a crime punishable as follows: 

  1. For a first violation, a misdemeanor punishable by imprisonment for not more than 1 year or a fine not more than $1,000.000, or both.

 

  1. For a second or subsequent violation, a felony punishable by imprisonment for not more than 2 years or a fine of not more than $10,000.00, or both.” 

Senate Bill No. 477’s major changes to the Act include felony provisions for multiple violations and the clarification that this is a crime, rather than a misdemeanor. 

What does this mean for employers? The Act as amended would deter employers from taking part in unethical processes.  Employers would need to make sure they maintain accurate payroll and accounting records. Violators would pay higher fines for subsequent violations, and could be imprisoned for criminal conduct if found guilty.  Ramifications include damage to a business’s reputation. 

What does this mean for employees?  This would mean employers would be more likely not to defraud their employees of their wages and benefits.  Employees would have more ease of mind when trusting in their employer’s payroll practices and this might help build better relationships between the employers and their employees. 

This act would commence 90 days after the date it is enacted into law.

You can find the original Act here: http://www.legislature.mi.gov/(S(mavkiagunh3dtpijakzzttoo))/mileg.aspx?page=getObject&objectName=mcl-408-485 

You can find the Senate Bill No. 477 here: http://www.legislature.mi.gov/(S(0uphumtdgwxbkrhviqjols3a))/mileg.aspx?page=GetObject&objectname=2019-SB-0477

Do not hesitate to contact the attorneys at Tishkoff if you have questions regarding business or employment law.  The attorneys at the Tishkoff, located in downtown Ann Arbor, Michigan, may be reached by phone or email.  Their contact information is available at Tishkoff’s web site: https://tish.law/.  Stay in touch with Tishkoff: http://bit.ly/TishkoffPLC.