MADISON — Today, the Wisconsin Building Trades Council released the following statement regarding the conviction of Gustavo Reyes, an operator of several Wisconsin drywall companies known to routinely exploit and misclassify workers:
“The sentencing of Gustavo Reyes underscores the critical importance of collaboration between labor, industry, and law enforcement in upholding the principles of a responsible construction sector,” said Emily Pritzkow, Executive Director of the Wisconsin Building Trades Council, “This outcome demonstrates the impact of collective efforts to expose and eliminate exploitative practices that undermine the well-being of workers and the credibility of our industry. The consequences of misclassification and payroll fraud ripple beyond immediate financial losses, affecting tax compliance, insurance credibility, and worker safety.”
According to Construction Business Group, the conviction is believed to be the first prosecution of a construction labor broker in Wisconsin for payroll fraud. Reyes was convicted in U.S. District Court Thursday on tax evasion charges and was sentenced to 18 months in prison and ordered to pay $557,907 in federal taxes owed. In addition to the federal criminal charges, Reyes also has had 20 separate liens totaling $2.3 million filed against him or his businesses since 2015 for failing to pay state taxes and unemployment insurance premiums.
Payroll fraud is a deliberate attempt by employers to avoid certain legal obligations and costs associated with hiring employees. Some employers may classify workers as independent contractors, with another common practice of creating “off the books” employees to save on payroll taxes, benefits, and administrative expenses. In those cases, workers are paid cash, do not appear on any payroll or employment records, and are often victims of wage theft.
