Minnesota Owners of Drywall Company Face Jail Time for Misclassifying Workers as Independent Contractors to Avoid Paying Workers Compensation Insurance Premiums

From the Star-Tribune, Paul Walsh reports that the owners of a drywall company face jail time for misclassifying workers as independent contractors to avoid paying workers compensation insurance premiums. Paul writes:

A husband and wife who ran a Minnesota drywall company have pleaded guilty to cheating their employees out of workers’ compensation insurance and pocketing more than $300,000.

LeRoy Mehr, 51, and Joyce Mehr, 50, of Annandale, Minn., former owners of Merit Drywall, each admitted to theft by swindle in Hennepin County District Court last week for the scheme they ran for a year until April 2017.

As part of the plea agreement, the Mehrs both face up to six months in jail and must repay their insurance provider, Federated Insurance, $309,000 in lost premiums. They also will be on probation for five years.

Two counts of insurance fraud against both are being dismissed. Sentencing is scheduled for Nov. 23.

Authorities allege that the Mehrs mischaracterized dozens of employees for the Clearwater, Minn., company as independent contractors in order to save money on workers’ compensation insurance premiums.

Independent contractors are required to supply their own workers’ compensation insurance.

The now-defunct company had worked on thousands of offices, apartments, and homes for more than 30 years, according to its website.

Source: Minnesota owners of drywall company admit stealing $300K in workers’ comp scheme – StarTribune.com

Workers Comp Central also reports that they set up fake companies to make workers appear as independent contractors:

The owners of a large drywall company who went so far as to create fake companies to make their workers appear to be independent contractors, have pleaded guilty to swindling their insurance company.

Prosecutors said the couple misclassified dozens of workers as independent contractors in order to slash their comp premiums. They did that partly by paying the workers in cash at setting up at least three companies that were registered with the Minnesota Secretary of State, prosecutors said

Read the full story at Drywall Company Owners Face Prison Time for Extensive Misclassification| Workers Compensation News | WorkCompCentral

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