24 October 2019

Michigan Attorney General Ramps Up Investigations of Payroll Fraud

On April 22, 2019, Michigan Attorney General Dana Nessel announced the formation of a new Payroll Fraud Enforcement Unit, which is tasked with investigating accusations of payroll fraud and “wage theft” against Michigan businesses. The AG’s Office has reportedly been receiving complaints at a steady pace since the announcement of the new unit and has begun investigating those complaints by issuing information requests to employers or conducting audits. The information requests we have seen so far seek detailed payroll information, including a listing of all workers performing services for the business in the preceding three fiscal years, complete payroll data for the preceding three fiscal years, and copies of any employment or independent contractor agreements.

In addition to ramping up its investigations through these information requests and audits, the AG’s Office announced its first criminal charges against a business accused of payroll fraud on August 28, 2019. The AG accuses the business owner of personally pocketing payroll deductions that should have been deposited into employees’ retirement accounts. The business owner has been charged with multiple felonies, including accusations of conducting a criminal enterprise and receiving and concealing stolen or converted property. The felony charges demonstrate how seriously the AG’s Office is taking this issue.

Given the intense focus the AG’s Office has placed on the issue of payroll fraud, Michigan businesses should consider conducting audits of their payroll practices before the AG comes knocking. If you have questions about your current practices or receive an information request from the AG’s Office, you can contact a Wage and Hour attorney at Miller Johnson for assistance.