2014 -- S 2394

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LC003836

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

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

GENERAL PROVISIONS

     Introduced By: Senator Hanna M.Gallo

     Date Introduced: February 12, 2014

     Referred To: Senate Labor

     It is enacted by the General Assembly as follows:

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

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

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

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

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

this title. Chapters 37-13, and title 44 shall be the same as those factors used by the Internal

Revenue Service in its code and regulations. ; provided, that a person performing any service,

except as provided under § 28-42-8, shall be presumed an "employee" unless:

     (1) The person is free from control and direction in connection with the performance of

the service, both under his or her contract and in fact for the performance of the service;

     (2) The service is performed outside the usual course of business of the procurer of the

service or outside of all the places of business of the procurer of the service; and

     (3) The person is engaged in an independently established trade, occupation, profession

or business of the same nature as that involved in the service performed. This requirement is

satisfied only by meeting the following criteria:

     (i) The individual possesses the essential tools, equipment and other assets necessary to

perform the services independent of the person for whom the services are performed;

     (ii) The individual’s arrangement with the person for whom the services are performed is

such that the individual shall realize a profit or suffer a loss as a result of performing the service

or the individual performs the services through a business in which the individual has a

proprietary interest;

     (iii) The individual maintains a business office or location that is separate from the

location of the person for whom the services are being performed;

     (iv) The individual has previously performed the services in accordance with paragraphs

(i), (ii) and (iii) and/or holds himself/herself out to other persons as available to perform the same

or similar services in accordance with paragraphs (i), (ii) and (iii) while free from direction or

control over performance of the services; and

     (v) The individual maintains adequate liability insurance during the term of the contract.

     (b) If the provider of the services furnishes and operates capital machinery and/or a

specialized or heavy commercial vehicle as the major component of the service provided, it shall

be considered a factor in demonstrating lack of direction or control by the procurer for purposes

of satisfying the requirements in subsection (a)(1) above.

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

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

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

     (d) Notwithstanding the presumption established in this section and the inability to satisfy

the requirements under subsections (a)(1) through (a)(3) above, a provider of services may still

overcome the presumption by application of the remaining factors used by the Internal Revenue

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

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

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

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

which they may be subject under applicable law.

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

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

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

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

that domestic service in a private home;

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

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

her father or mother;

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

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

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

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

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

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

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

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

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

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

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

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

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

      (4) Service performed:

      (i) In the employ of:

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

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

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

association of churches;

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

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

order;

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

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

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

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

that rehabilitation or remunerative work;

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

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

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

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

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

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

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

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

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

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

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

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

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

chapters;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

for remuneration solely by way of commission;

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

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

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

apply to service performed as industrial and debit insurance agents;

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

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

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

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

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

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

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

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of employers;

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

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

pursuant to which:

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

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

of that catch; and

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

individuals; and

      (14) Services performed by a member of an Americorp AmeriCorps' program. ; and

     (15) Services performed by a newspaper carrier.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

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

GENERAL PROVISIONS

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     This act would adjust a trust for determining whether a worker is an employee and

independent contractor. It would also exempt from the definition of employment services

performed by members of an AmeriCorps' program and newspaper carriers.

     This act would take effect upon passage.

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LC003836

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