2013 -- S 0368

=======

LC01198

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

____________

A N A C T

RELATING TO LABOR AND LABOR RELATIONS -- EMPLOYMENT SECURITY--

GENERAL PROVISIONS

     Introduced By: Senators McCaffrey, Goodwin, Lombardi, Miller, and Gallo

     Date Introduced: February 13, 2013

     Referred To: Senate Labor

It is enacted by the General Assembly as follows:

1-1

     SECTION 1. Sections 28-42-7 and 28-42-8 of the General Laws in Chapter 28-42

1-2

entitled "Employment Security - General Provisions" are hereby amended to read as follows:

1-3

     28-42-7. Independent contractor and employee distinguished Employee

1-4

presumption -- Independent contractor exemption. -- (a) The determination of independent

1-5

contractor or as opposed to employee status for purposes of chapters 12, 14, 42 -- 44 of this title,

1-6

chapter 37-13 and title 44 shall be established as follows: shall be the same as those factors used

1-7

by the Internal Revenue Service in its code and regulations.

1-8

     (1) The term "employee" means any person who has entered into the employment of

1-9

work under contract of service or apprenticeship with another person or entity. The term

1-10

"employee" does not include an independent contractor. Any person performing work for or on

1-11

behalf of another shall be presumed to be an "employee," unless it is demonstrated that the person

1-12

is an independent contractor as defined below or exempted under section 28-42-8.

1-13

     (2) The term "independent contractor" means a person, firm or corporation who contracts

1-14

with another to perform a specific task or unit of work; who furnishes and has sole control over

1-15

any assistants engaged to complete the work; who executes the work in accordance with the

1-16

independent contractor's own ideas; plans, policies, or according to a plan previously provided by

1-17

the person or entity for whom the work is performed and who is not subject to the hiring person's

1-18

or entity's orders relating to the performance of the details of the work.

2-19

     (b) The failure to withhold federal or state income taxes or to pay unemployment

2-20

compensation contributions or workers' compensation premiums with respect to a person's

2-21

compensation shall not be considered in making a determination under this section.

2-22

     (c) In making the determination under subsection (a) above, the presumption of employee

2-23

status may be overcome by application of the remaining factors used by the Internal Revenue

2-24

Service, with the exception of those excluded under the subsection (b) above.

2-25

     (d) Any person, business, corporation, employer or entity of any kind failing to properly

2-26

classify a worker as an employee according to this section shall be subject to liability and

2-27

penalties as provided under chapter 28-14 in addition to any other liability, penalties or relief to

2-28

which they may be subject under applicable law.

2-29

     28-42-8. Exemptions from "employment". -- "Employment" does not include:

2-30

      (1) Domestic service in a private home performed for a person who did not pay cash

2-31

remuneration of one thousand dollars ($1,000) or more in any calendar quarter after December

2-32

31, 1977, in the current calendar year or the preceding calendar year to individuals employed in

2-33

that domestic service in a private home;

2-34

      (2) Service performed by an individual in the employ of his or her son, daughter, or

2-35

spouse, and service performed by a child under the age of eighteen (18) in the employ of his or

2-36

her father or mother;

2-37

      (3) Service performed in the employ of any other state or any of its political

2-38

subdivisions, the United States government, an instrumentality of any other state or states or their

2-39

political subdivisions, or of an instrumentality of the United States, except that if the Congress of

2-40

the United States permits states to require any instrumentalities of the United States to make

2-41

payments into an unemployment fund under a state unemployment compensation act, then, to the

2-42

extent permitted by Congress, and from and after the date as of which permission becomes

2-43

effective, all of the provisions of chapters 42 -- 44 of this title shall be applicable to those

2-44

instrumentalities and to services performed for those instrumentalities, in the same manner, to the

2-45

same extent, and on the same terms as to all other employers, employing units, individuals, and

2-46

services. If this state is not certified by the Secretary of Labor under 26 U.S.C. section 3304 for

2-47

any year, then the payments required of those instrumentalities with respect to that year shall be

2-48

deemed to have been erroneously collected within the meaning of section 28-43-12 and shall be

2-49

refunded by the director from the fund in accordance with section 28-43-12;

2-50

      (4) Service performed:

2-51

      (i) In the employ of:

2-52

      (A) A church or convention or association of churches, or

3-53

      (B) An organization which is operated primarily for religious purposes and which is

3-54

operated, supervised, controlled, or principally supported by a church or convention or

3-55

association of churches;

3-56

      (ii) By a duly ordained, commissioned, or licensed minister of a church in the exercise of

3-57

his or her ministry or by a member of a religious order in the exercise of duties required by that

3-58

order;

3-59

      (iii) In a facility conducted for the purpose of carrying out a program of rehabilitation for

3-60

individuals whose earning capacity is impaired by age, physical or mental deficiency, or injury or

3-61

providing remunerative work for individuals who, because of their impaired physical or mental

3-62

capacity, cannot be readily absorbed in the competitive labor market, by an individual receiving

3-63

that rehabilitation or remunerative work;

3-64

      (iv) As part of an unemployment work relief or work training program assisted or

3-65

financed in whole or in part by any federal agency or an agency of a state or one of its political

3-66

subdivisions, by an individual receiving that work relief or work training;

3-67

      (v) In the employ of a hospital by a patient of the hospital; or

3-68

      (vi) By an inmate of a custodial or penal institution;

3-69

      (5) Service with respect to which unemployment compensation is payable under an

3-70

unemployment compensation system established by an act of Congress. The director is authorized

3-71

and directed to enter into agreements with the proper agencies under that act of Congress, which

3-72

agreements shall become effective ten (10) days after their publication as in the manner provided

3-73

in section 28-42-34 to provide reciprocal treatment to individuals who have, after acquiring

3-74

potential rights to benefits under chapters 42 -- 44 of this title acquired rights to unemployment

3-75

compensation under that act of Congress, or who have, after acquiring potential rights to

3-76

unemployment compensation under that act of Congress, acquired rights to benefits under those

3-77

chapters;

3-78

      (6) Service covered by an election duly approved by the agency charged with the

3-79

administration of any other state or federal employment security law in accordance with an

3-80

arrangement pursuant to section 28-42-58 during the effective period of that election, except as

3-81

provided in section 28-42-3(15)(i);

3-82

      (7) Services performed by an individual in any calendar quarter on or after January 1,

3-83

1972 in the employ of any organization exempt from income tax under 26 U.S.C. section

3-84

501(a)(other than services performed for an organization defined in section 28-42-3(24) or for

3-85

any organization described in 26 U.S.C. section 401(a) or under 26 U.S.C. section 521) if the

3-86

remuneration for that service is less than fifty dollars ($50.00);

4-87

      (8) Service which is occasional, incidental, and occurs irregularly, and is not in the

4-88

course of the employing unit's trade or business. Service for a corporation shall not be excluded;

4-89

      (9) Service as a golf caddy, except as to service performed solely for a club with respect

4-90

to which the club alone bears the expense. A golf caddy, except as in this specifically provided

4-91

subdivision, shall not be construed to be an "employee" as defined in section 28-42-3(14);

4-92

      (10) Notwithstanding any provisions of titles 5 and 27, service performed by an

4-93

individual as a real estate salesperson if all the service performed by that individual is performed

4-94

for remuneration solely by way of commission;

4-95

      (11) Notwithstanding any provisions of titles 5 and 27, service performed by an

4-96

individual as an insurance broker, agent, or subagent if all the service performed by that

4-97

individual is performed for remuneration solely by way of commission. This exemption shall not

4-98

apply to service performed as industrial and debit insurance agents;

4-99

      (12) Service performed by an individual who is enrolled at a nonprofit or public

4-100

educational institution which normally maintains a regular faculty and curriculum and normally

4-101

has a regular organized body of students in attendance at the place where its educational activities

4-102

are carried on, as a student in a full-time program, taken for credit at that institution which

4-103

combine academic instruction with work experience, if that service is an integral part of that

4-104

program, and that institution has so certified to the employer, except that this subdivision shall

4-105

not apply to service performed in a program established for or on behalf of an employer or group

4-106

of employers;

4-107

      (13) Service performed by an individual on a boat engaged in catching fish or other

4-108

forms of aquatic animal life under an arrangement with the owner or operator of that boat

4-109

pursuant to which:

4-110

      (i) That individual does not receive any cash remuneration other than a share of the

4-111

boat's catch of fish or other forms of aquatic animal life or a share of the proceeds from the sale

4-112

of that catch; and

4-113

      (ii) The operating crew of that boat is normally made up of fewer than ten (10)

4-114

individuals; and

4-115

      (14) Services performed by a member of an AmeriCorp program.

4-116

     (15) Services performed by a newspaper carrier; and

4-117

     (16) Services performed by individuals that sublease space to perform a service for which

4-118

they do not receive any compensation from their sublessor.

4-120

SECTION 2. This act shall take effect upon passage.

=======

LC01198

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO LABOR AND LABOR RELATIONS -- EMPLOYMENT SECURITY--

GENERAL PROVISIONS

***

6-1

     This act would clarify the definition of independent contractor by providing a

6-2

presumption that a person is an employee unless certain specific conditions are met.

6-3

     This act would take effect upon passage.

=======

LC01198

=======